The Pound Sterling to South African Rand (GBP/ZAR) exchange rate was trending in a narrow range on Wednesday morning.
After Federal Reserve Chair Janet Yellen made dovish comments with regard to hiking rates, the US Dollar softened against many of its major peers. This allowed emerging-market currencies to flourish, and the South African Rand is one of the currencies that benefitted. The gains have been somewhat sluggish, however, after Tuesday’s domestic growth figures produced mixed results.
The Pound, meanwhile, is generally holding a position of strength versus most of its major rivals thanks to positive domestic data. Additional gains can be attributed to speculation that Bank of England (BoE) Governor Mark Carney will make hawkish comments in a speech at a research conference.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate is currently trending in the region of 17.7400.
Pound Sterling (GBP) Exchange Rate Gains on Positive Data
After BoE Governor Mark Carney reiterated that low inflation was temporary and shouldn’t stop British businesses from raising wages, the Pound strengthened. A relatively dovish speech from Fed Chair Janet Yellen compounded speculation that the BoE could overtake the Fed when it comes to hiking rates.
Bolstering Sterling gains on Wednesday was positive domestic data. Loans for House Purchase data was forecast to tick higher in January, from 35816 to 36000. The actual result, however, reached 36394. ‘There continues to be strong demand for personal borrowing which is at its highest levels in recent years,’ said Richard Woolhouse, chief economist at the BBA.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate dropped to a low of 17.6700 today.
South African Rand (ZAR) Exchange Rate Edges Higher on Risk Appetite
After fears of a Grexit eased and China’s manufacturing activity grew beyond expectations, demand for safe-haven assets cooled. The resultant lower US Dollar saw emerging-market assets surge, including the South African Rand.
The Rand’s gains have been somewhat laboured, however, after Tuesday’s growth figures produced mixed results. On a yearly basis, fourth-quarter Gross Domestic Product grew by 1.3%, down from the previous figure of 1.6%. On a quarterly basis, however, GDP increased by 4.1%; eclipsing the forecast growth of 3.4% significantly.
The lowest yearly growth in 5 years has been blamed on problems with domestic energy, namely Eskom the electricity producing company. ‘Investors are well aware that Eskom’s electricity supply constraints are the biggest problem to industry and economic growth, but they will want to hear how the Treasury seeks to solve Eskom’s funding deficit.’
Pound Sterling to South African Rand (GBP/ZAR) Exchange Rate Forecast to Gain
Given that oil prices continue to decline, and positive sentiment towards the British asset is growing, the Pound Sterling to South African Rand (GBP/ZAR) exchange rate has the potential to gain over the course of Wednesday.
Thursday ought to see GBP/ZAR volatility, with South African inflation data and British growth rate estimates due for publication.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate advanced to a high today of 17.7900.
