Pound Sterling to South African Rand (GBP/ZAR) Exchange Rate close to one-month high

Pound to South African Rand exchange rate chart

The Pound to Rand (GBP/ZAR) exchange rate is trading close to its highest-level since the end of March as increased tensions over the Ukraine crisis, disappointing data out of China and the ongoing strike in South Africa’s platinum mining sector weighed upon the Rand.

Hopes for peace in Ukraine received a blow after Ukraine’s acting President Oleksandr Turchynov called for the resumption of military operations against pro-Russian separatists in the east of the country. His calls came after the bodies of two Kiev supporters were found near the separatist held city of Slavyansk. Investors are growing concerned that an escalation of military operations could lead to further intervention by Russia and the imposition of harsher sanctions upon Russia by the USA. Risk sentiment and demand for emerging market currencies fell as a result.

The weaker-than-forecast manufacturing data out of China also damaged sentiment towards the riskier currencies. China is one of South Africa’s major trading partners and continued weakness in the world’s second largest economy often has a negative impact upon the Rand.

Domestic data showed that South Africa’s inflation rate rose to 6% in March the highest figure set in the Central bank’s target. The figure was higher than the 5.9% forecast by economists. The higher than expected figure could lend support to the Rand as investors will raise their expectations for the bank to increase interest rates at its May policy meeting.

“The rates market is pricing in a 50% chance of a rate hike at the next meeting and this will increase should the inflation print come out higher than the 5.9% currently expected,” said Standard Bank trader Warrick Butler before the data was released.

The Rand could also regain some ground if today’s negotiations between striking platinum miners and producers result in an agreement.

South African Rand (ZAR) Exchange Rates