After halting a prolonged bearish run on Wednesday when British labour data impressed, the Pound extended gains on Thursday following a hawkish speech by Bank of England policymaker Martin Weale. Meanwhile the South African Rand has struggled against risk aversion and cooling retail sales.
The Pound Sterling to South African Rand exchange rate is currently trending in the region of 17.8462.
On Wednesday the Pound managed to rebound from a sustained declination after labour market data printed above expectations. Perhaps of most significance (in terms of pressuring the Bank of England into normalising monetary policy) were a slight improvement in average weekly wage growth and a positive declination in unemployment.
As geopolitical anxieties regarding the Ebola virus mount, the South African Rand has generally depreciated against most of its major peers.
Rand losses were extended on Wednesday after retail sales were seen to soften beyond expectations. Yearly Retail Sales were forecast to drop from 2.4% to 2.2%, but the actual result was a cooling to 2.1%. On a monthly basis Retail Sales declined beyond the median market forecast of a fall from growth of 1.2% to 0.67%, with the actual result softening to 0.6%.
The Pound Sterling to South African Rand exchange rate has dropped to a low today of 17.5925.
Thursday has shown Sterling to have extended the gains made from Wednesday’s positive labour market data, which can be directly linked to hawkish comments made by Bank of England policymaker Martin Weale.
Weale suggested that the improvement in unemployment is reason enough to increase the benchmark interest rate. Instead of waiting to see pay inflation increase it would be appropriate to ‘anticipate that wage growth.’
‘An increase in Bank Rate of 0.25 percentage point would be unlikely to slow that process to a halt immediately but there is a risk that, if the increase were delayed, inflation would be pushed above target or a rather sharper increase in Bank Rate would be needed subsequently,’ he said.
Weale added; ‘The margin of spare capacity is shrinking rapidly and all logic suggests that that ought to lead to an increase in inflationary pressures over the two to three year horizon which concerns the Committee. An increase in Bank Rate of 25 point would be unlikely to slow that process to a halt immediately.’
An absence of South African data on Thursday has seen the Rand extend the losses from Wednesday’s cool retail sales data.
Forecast for the Pound to South African Rand
With an absence of both British and South African data on Friday, the GBP/ZAR exchange rate is likely to continue appreciating. Volatility could be caused, however, by Sir Jon Cunliffe (a BoE official) making a speech in London later on Thursday.
The Pound Sterling to South African Rand has reached a high today of 17.8659.
South African Rand (ZAR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
South African Rand,
,US Dollar,0.0895,
South African Rand,,Euro,0.0702,
South African Rand,,Pound,0.0560,
South African Rand,,Australian Dollar,0.1028,
US Dollar,,South African Rand,11.1618,
Euro,,South African Rand,14.2345,
Pound Sterling,,South African Rand,17.8545,
Australian Dollar,,South African Rand,9.7284,
[/table]
