The Pound Sterling to South African Rand (GBP/ZAR) exchange rate softened by around -0.42% on Thursday afternoon.
Although South African producer price inflation cooled on Thursday, the Rand appreciated. This is because low producer prices extended bond market strength which, in turn, saw heightened demand for the Rand from foreign investors. A soft US Dollar is also positive for the emerging-market currency.
The Pound, meanwhile, is generally holding steady versus most of its major peers thanks to mixed results from domestic data. Continued positive sentiment towards the Bank of England (BoE) has kept Sterling holding in a position of strength.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate is currently trending in the region of 17.6960.
Pound Sterling (GBP) Exchange Rate Holding Steady on Mixed Data
British economic data produced a mixed set of results on Thursday, which halted Sterling’s recent bullish run. The Pound is maintaining its position of strength, however, with continued speculation that the BoE will be one of the first major central banks to increase the benchmark interest rate.
Preliminary UK Gross Domestic Product met with the median market forecast figures on both a yearly and quarterly basis in the fourth-quarter. However, the potential gains from these positive results were snubbed out by a significant slide in business investment.
Howard Archer, chief UK and European economist at IHS Global Insight, said: ‘A disappointment with growth in the fourth quarter was that it was unbalanced on the output side of the economy.’
On the disappointing business investment score, Ian Kernohan, chief economist at Royal London Asset Management, stated; ‘Two notable trends in the expenditure breakdown were the weakness in investment, and the strength in trade. Outside the energy sector however, business survey data on investment intentions remain quite buoyant. The trade deficit narrowed, as exports grew faster than imports, and this factor was the major contributor to growth in the quarter.’
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate dropped to a low today of 17.6100.
South African Rand (ZAR) Exchange Rate Strengthens despite PPI Slide
The South African Producer Price Index dropped from -0.2% to -1.1% on a monthly basis, with January’s PPI dropping from 5.8% to 3.5% on the year. However, this has been positive for the Rand thanks to foreign investment in the bonds market.
‘Although we are in line with consensus regarding this morning’s domestic PPI inflation data, a downside surprise could be conducive to extended bond market strength and in turn (be) Rand positive if foreign investors buy more South African scrip as a result,’ said the research team.
Additional gains are as a result of a softer US Dollar after Federal Reserve Chair Janet Yellen made dovish comments with regard to rate hikes.
Pound Sterling to South African Rand (GBP/ZAR) Exchange Rate Forecast to Hold Losses
With a lack of data to provoke changes, the Pound Sterling to South African Rand (GBP/ZAR) exchange rate is likely to hold losses for the remainder of Thursday’s trade. With that being said, US data is likely to impact upon the Rand.
Friday should see GBP/ZAR volatility with data pertaining to both nations due for publication.
The pound Sterling to South African Rand (GBP/ZAR) exchange rate reached a high today of 17.8260.
