The Pound Sterling to South African Rand (GBP/ZAR) exchange rate softened on Thursday as traders who had initially reacted positively to British finance minister George Osborne’s latest fiscal statement focused on negative aspects including a cut to longer-term growth forecasts.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate continued to strengthen on Wednesday and rose by more than 1% as data showed that the UK’s dominant services sector improved more than forecast in November. The Rand meanwhile weakened due to broader US Dollar strength after Fed policy makers talked up the US economy and hinted that an interest rate rise was drawing closer.
On Wednesday, the Pound to South African Rand (GBP/ZAR) exchange rate continued to strengthen as the Rand was weakened by a strengthening US Dollar and expectations that domestic data would disappoint.
The Pound to South African Rand (GBP/ZAR) exchange rate held onto earlier gains despite weak UK construction data. Concerns over the global economy and commodity prices put pressure onto the Rand.
Earlier on Tuesday the Pound to South African Rand (GBP/ZAR) exchange rate firmed as a lack of data out of South Africa spurred traders to look overseas for guidance and as worries over South Africa’s current account deficit weigh on the currency.
The Pound to South African Rand (GBP/ZAR) exchange rate gave up some of its earlier gains as the latest South African Kagiso PMI coming in at its best level since August 2013.
Earlier in the session the Pound Sterling to South African Rand (GBP/ZAR) exchange rate is closing in on a two-week high and is forecast to climb higher as last Friday’s South African trade data combined with tumbling commodity prices and weak Chinese data.
Against the US Dollar, the Rand weakened to its lowest level in three-weeks as the currency extended its losses from last week’s data, which showed that exports fell sharply, and imports soared.
According to the report published by the Pretoria based South African Revenue Service showed that the nation’s trade gap widened sharply to 21.33 billion Rand ($1.9 billion) in October as imports soared by 17.8%, the deficit jumping to a cumulative 95.11 billion Rand for 2014.
The Pound to South African Rand exchange rate hit a Session High of 17.604
‘The significant deficits again underscore South Africa’s weak economic fundamentals. Disparity between inflows and outflows translates into weaker demand for the Rand,’ said an economist from NKC Independent economist.
The sharp fall in commodity prices is weighing heavily upon emerging market and commodity based assets. A referendum vote held over the weekend in Switzerland added to the pressure on the Rand as gold prices fell.
‘South Africa’s cumulative deficit is in record-high territory,’ Jeffrey Schultz, an economist at BNP Paribas Cadiz Securities, said by phone from Johannesburg today. ‘This does not bode well for the currency, particularly in light of the fact that we’re still running a current-account deficit of around 6 percent of gross domestic product.’
Falling Commodities Forecast to Keep GBP/ZAR Supported
Falling oil prices have had a negative impact on the Rand as the rapid decline in value of the commodity over the past few months is expected to lead to lower inflation levels and caused importers to increase their purchases of the commodity. Oil prices fell further after last week’s OPEC meeting concluded that the group’s members would not alter production levels.
The Pound meanwhile found support from a better than forecast Manufacturing PMI report.
