The Pound Sterling to South African Rand (GBP/ZAR) exchange rate strengthened by around 0.32% on Friday morning.
After British trade balance data showed a wider-than-forecast deficit, the Pound slumped versus many of its major peers. Additional declination can be attributed to yet more inaction from the Bank of England (BoE) in their most recent policy meeting.
The South African Rand, meanwhile, is generally trending lower versus many of its most traded competitors. This can be attributed to a drop in foreign reserves. Further depreciation is as a result of dampened market sentiment after geopolitical tensions regarding Greece provoked risk averse trading.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate is currently trending in the region of 17.2860.
Pound Sterling (GBP) Exchange Rate Softens on British Data
UK trade data declined beyond expectations on Friday, causing the Pound to soften versus the majority of its most traded currency rivals. Total Trade Balance was forecast to narrow from a shortfall of -£1841 to -£1700, but the actual result dropped to -£2895. The non-EU Trade Balance also came in worse than forecast, falling from -£2778 to -£3796. In addition, Visible Trade Balance declined from -£9283 to -£10154 despite the market consensus of a slight improvement to -£9100.
Additional Sterling declination can be attributed to mounting negative sentiment towards the BoE. After their latest policy meeting showed policymakers were content to delay tightening monetary policy for the foreseeable future, the Pound ticked lower. A large depreciation was avoided as traders already priced-in the BoE’s inaction.
‘In many respects, you’d might argue that 12 months ago there was a strong case for a rate hike, but today that’s gone,’ Peter Dixon, strategist at Commerzbank said. ‘Now [the BOE] doesn’t have much left in the locker to counter a potentially deflationary or disinflationary threat.’
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate has fallen to a low of 17.2430 today.
South African Rand (ZAR) Exchange Rate Ticks Lower on Market Sentiment
South African data printed disappointingly on Friday, causing the Rand to soften versus many of its major peers. Foreign Exchange Reserves dropped from $49.1 billion to $47.6 billion in January.
After the European Central Bank (ECB) took a firm stance with Greece with regards to their debt crisis, trader risk sentiment dampened significantly. The South African Rand, as an emerging market asset, declined from cooling risk appetite.
In an apparent reference to the tough stance taken by the ECB and others, Greece’s Prime Mnister Tsipras said: ‘Greece cannot be blackmailed because democracy in Europe cannot be blackmailed.’
Pound Sterling to South African Rand (GBP/ZAR) Exchange Rate Forecast to Hold Gains
Although the disappointing British data caused the Pound to decline versus many of its competitors, the lack of risk appetite is likely to overshadow domestic data.
Therefore, the Pound Sterling to South African Rand (GBP/ZAR) exchange rate is likely to hold gains for the remainder of Friday. Any significant Rand volatility is unlikely until Tuesday’s unemployment rate and manufacturing data.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate climbed to a high today of 17.3540.
