Prior to the release of South Africa’s Consumer Confidence Index, the Pound Sterling to South African Rand (GBP/ZAR) exchange rate was trending 0.6% lower.
While concerning domestic trade figures saw the Rand slide to within touching distance of an eight-month low earlier in the week, signs that the US Dollar’s recent rally was excessive has since seen the ‘Greenback’ fall and emerging-market currencies like the Rand benefit.
After a report showed an extensive widening in South Africa’s trade deficit, one industry expert commented; ‘Alongside still-weak growth data and an exposed Rand, this will serve as a reminder of the ongoing vulnerability of South Africa to changes in external financing conditions, because of the size of its current account deficit.’
The Rand was also affected by a relatively hawkish statement from Lesetja Kganyago, Deputy Governor of the South African Reserve Bank. On Tuesday the policy maker asserted that the SARB should be focusing on inflation as it has only limited room in which to boost domestic demand.
However, while the Rand spent the first half of the week struggling against the US Dollar, the currency was able to garner some upward momentum against the Pound.
The Pound weakened on Wednesday after the UK’s Manufacturing PMI fell short and consolidated losses against peers like the Rand on Thursday as a BoE policy maker commented on the impact strong Sterling has on UK inflation.
The Pound Sterling to South African Rand exchange rate hit a low of 18.0400.
With the weakening US Dollar supporting emerging-market currencies like the Rand, the GBP/ZAR exchange rate continued trending lower even after South Africa published a less-than-impressive Consumer Confidence report and the UK’s Construction PMI surprised to the upside.
South Africa’s FNB/BER Consumer Confidence Index fell from +4 to -1 in the third quarter of the year after rebounding from -6 in the second.
While the decline was disappointing, FNB/BER asserted; ‘The fact that the consumer confidence index did not revert back to earlier lows is heartening and points to an improved willingness among consumers to spend relative to the same time a year ago. Bolstered by a recovery in household incomes following the end of the platinum and engineering sector strikes, as well as lower petrol prices, consumers’ ability to spend should also improve.’
Pound to South African Rand (GBP/ZAR) Exchange Rate Forecast
The GBP/ZAR exchange rate is likely to continue trending lower for the rest of the European session.
The Pound to South African Rand pairing could experience movement tomorrow in response to the UK’s Markit Services/Composite PMI. As the UK services sector accounts for such a large percentage of domestic growth, the Pound could strengthen if the gauge prints positively.
South Africa’s KASIGO Manufacturing PMI could also impact GBP/ZAR trading.
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,18.1040,
Euro,,South African Rand,14.1200,
US Dollar,,South African Rand,11.1805,
Australian Dollar,,South African Rand,9.8346,
New Zealand Dollar,,South African Rand,8.7575,
Canadian Dollar,,South African Rand,10.0921,
[/table]
