Pound to South African Rand (GBP/ZAR) Exchange Rate weakens as pressure on emerging markets ease

The South African Rand managed to regain ground against the Pound and other major peers including the US Dollar on Tuesday as emerging markets received some relief from views that sanctions imposed by the US onto Russia were not as harsh as had been expected.

The selling of emerging market currencies eased yesterday as fears that a new batch of sanctions imposed by the West on Russia could harm the global economy eased. Instead the sanctions were considered softer than expected.

Trade of the South African currency is expected to be light throughout the rest of the week due to domestic markets being closed on Thursday for a national holiday. Markets were also closed yesterday.

The Rand could experience further gains on Wednesday if the Eurozone’s latest inflation figures come in positively. The Rand often tracks the Euro and a positive data report will send the single currency higher against its peers, a movement that the Rand is likely to follow.

Sterling meanwhile was softer against most of its major peers after today’s GDP data came in below economist forecasts. The report showed that the UK economy expanded by 0.8% in the first quarter of 2014, below economist expectations for a rise of 0.9%.

Tomorrow sees the release of domestic data including private sector credit and money supply data for March and trade account data. The data could further Rand bulls if South Africa’s trade position surprises to the upside.