The South African Rand (ZAR) to Pound Sterling (GBP) exchange rate was seeing mixed movement on Friday, due to market eagerness for economic data out of the US overshadowing data releases from the UK and South Africa.
Early in the session, the Rand advanced against the already weakened Pound due to domestic data showing that business activity in South Africa expanded at its fastest pace in 21 months in September.
The HSBC purchasing managers index (PMI) rose to 52.6 in September from 51.1 in August, improving for the third straight month. Any figure above 50 indicates expansion whilst a number below indicates contraction.
Business activity increased at its quickest pace since the end of 2012 as companies increased their order intakes and the nations mining industry showed signs of recovering from a five-month strike in its platinum sector.
‘Demand indicators led to the improvement, with marked increases in output and new orders, while companies rebuilt inventories in anticipation of recovering demand. Cost pressures remain high, with both purchase prices and staff costs climbing sharply. Wage inflation as shown by staff costs sub-index rose to an all-time high in September, illustrating the cost pressures associated with recent high wage settlements,’ said HSBC economist David Faulkner.
Sterling meanwhile was under pressure from the publication of a report, which showed that activity in the UK’s dominant service sector slowed to a three-month low in September. The report increased concerns that the UK’s economic rally could be slowing.
Markit research group said the U.K. services purchasing managers’ index slipped to 58.7 in September from a reading of 60.5 the previous month. Analysts had expected the index to tick down to 59.1 last month.
South African Rand to Pound Sterling Exchange Rate Forecast
The Rand is forecast to give up its earlier gains as it comes under pressure ahead of the release of eagerly anticipated data from the United States.
As the US Dollar strengthens prior to the data, emerging market currencies like the Rand have come under pressure and given up earlier gains. Economists are expecting the data to show that US economy created more than 200,000 jobs in September.
If the data comes in as or stronger than forecast we can expect to see the Rand fall further against the Pound and other major peers.
The currency also remains vulnerable to concerns over possible labour strike action and risk aversion because of the Ebola crisis in West Africa and the conflict in the Middle East.
South African Rand (ZAR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,South African Rand,18.0651 ,
Euro,,South African Rand,14.2073 ,
US Dollar,,South African Rand,11.2525 ,
Australian Dollar,,South African Rand,9.8484 ,
[/table]
