The Pound (GBP) to South African Rand (ZAR) exchange rate reached its highest level in two-months on Monday as the African currency came under pressure from a strong US Dollar, risk aversion and expectations that Tuesday’s economic data will disappoint.
At the start of European trading, the Rand tumbled sharply as traders grew concerned over the pro-democracy protests taking place in Hong Kong. The currency came under some pressure as investors favoured safer assets.
Concerns were heightened after Hong Kong police used teargas and pepper spray against the peaceful demonstration, increasing worries that violence could escalate.
With the protests mostly taking place in Hong Kong’s financial district the markers were worried that normal business conditions could be negatively affected.
The biggest driver for the Rand’s weakness however comes from the strength of the US Dollar. The US currency gained solidly against most of its major peers and particularly strengthened against the worlds emerging and commodity based currencies.
Last Friday’s strong Gross Domestic Product (GDP) growth data was continuing to support and with this week set to a busy one for economic data releases expectations are high that the US Dollar will find more support.
Demand for the US Dollar continued to be underpinned after data on Friday showed that the U.S. economy grew at an annual rate of 4.6% in the second quarter, the fastest pace in two-and-a-half years. On Monday the US currency surged to a four-year high against a basket of currencies and hit a six-year high against the Japanese Yen as last week’s data continued to support.
Pound Sterling to South African Rand Exchange Rate Forecast
The Pound is forecast to make more gains against the South African Rand on Tuesday as economists widely expect the latest current account deficit data to come in below expectations.
‘We expect another large current account deficit on Tuesday. Although the Rand should benefit from some encouraging local manufacturing data and/or a dovish European Central Bank meeting on Thursday, the Rand is likely to struggle to sustain any gains because we are expecting Friday’s US payrolls data to surprise to the upside,’ said Barclays in a research note.
Data Releases for the Rand This Week
Tuesday September 30 – 13:00 pm GMT South Africa Balance of Trade
Wednesday October 1 – 08:15 am KASIGO Manufacturing PMI
Thursday October 2 – 11:00 am Consumer Confidence
UPDATE
The Pound Sterling to South African Rand exchange rate softened modestly on Tuesday as investors reacted to some below forecast UK data and awaited the publication of South Africa’s trade balance figures.
However, as the European session progressed and UK second quarter GDP was positively revised from 0.8% to 0.9% the Pound recovered its strength and pushed higher against peers like the Rand.
If South Africa’s trade deficit is shown to have widened, the GBP/ZAR exchange rate could advance further.
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,18.3199 ,
Euro,,South African Rand,14.3065 ,
US Dollar,,South African Rand,11.2741 ,
Australian Dollar,,South African Rand,9.8551 ,
[/table]
