As demand for the ‘Greenback’ (USD) surges emerging market currencies, such as the South African Rand, generally depreciate. Sterling is still riding high following Bank of England Governor Mark Carney’s speech on Thursday in which he intimated towards a near-future benchmark rate increase.
The Pound Sterling to South African Rand exchange rate is currently trending in the region of 18.2260.
On Thursday Bank of England Governor Mark Carney gave a speech at a conference in Wales. He suggested that many of the conditions for normalising monetary policy have now been met, and a rate increase is on the cards. ‘The point at which interest rates […] begin to normalise is getting closer,’ he said. ‘In recent months the judgement about precisely when to raise Bank Rate has become more balanced. While there is always uncertainty about the future, you can expect interest rates to begin to increase’.
Those invested in the South African Rand would have been pleased with Thursday’s Producer Prices data which cooled from 8.0% to 7.3% in August. The decline is positive because it brings inflation closer to the 3-6% target set by the South African Central Bank.
The Pound Sterling to South African Rand exchange rate has hit a low today of 18.1490.
Friday’s British economic data could have printed more positively but it has had little effect in terms of provoking Sterling volatility. The Hometrack Housing Survey showed a yearly declination from 5.5% to 5.0% having fallen by 0.1% in September.
Any purposeful Sterling decline is likely to be as a result of negative sentiment towards the possibility of British military involvement in the crisis regarding Isis terrorists. Parliament is currently voting on the decision to join the US airstrikes.
With an absence of South African data on Friday the Rand has struggled to battle against rising geopolitical tension and an all-powerful US Dollar. ‘Given that we, along with consensus, believe that the U.S. GDP figure will show an improvement today, the Rand will likely continue in its weaker trend heading into the weekend,’ Barclays Africa said in a note. The US annualised second-quarter Gross Domestic Product did indeed meet with the market consensus.
Forecast for the Pound to South African Rand Exchange Rate
Sterling’s position over the weekend will be dictated by the decision as to whether British military intervention is appropriate and feasible. All indications are that Prime Minister David Cameron will get his wish of the go ahead to take military action.
The South African Rand is unlikely to change much over the weekend. As geopolitical issues continue to take centre stage in the media, and the US Dollar enjoys its bullish run, the Rand is very unlikely to rebound from the current slump.
The Pound Sterling to South African Rand exchange rate has reached a high today of 18.3080.
