The Pound Sterling to South African Rand (GBP/ZAR) exchange rate edged higher by around 0.11% on Wednesday afternoon.
After minutes from the most recent Bank of England (BoE) policy meeting showed officials expect economic slack in the UK to diminish within a year, the Pound advanced versus all of its major peers. The appreciation was somewhat sluggish, however, given that the minutes showed policymakers were unanimous in the decision to hold the cash rate.
The South African Rand, meanwhile, strengthened versus most of its major rivals in response to mixed economic data. Whilst domestic inflation rose, retail prices slumped. Additional gains can be linked to a statement from Eskom, South Africa’s leading energy provider, which stated that the grid will stabilise from next month.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate is currently trending in the region of 18.4720.
Pound Sterling (GBP) Exchange Rate Forecast to Strengthen against the Euro on Slack Erosion
With the single currency struggling amid speculation that Greece will be forced to exit the Eurozone, the Pound advanced versus its European counterpart.
Minutes from the most recent BoE policy meeting contained both hawkish and dovish elements, but the Pound strengthened as traders responded to the positive aspects. Of particular note was the fact that all of the policymakers expect slack in the UK to erode within a year. This would see inflation rise and policymakers would have to increase the benchmark interest rate to accommodate rising inflation.
However, Sterling gains have been somewhat sluggish thanks to the fact that all of the BoE policymakers were unanimous in the decision to hold the cash rate at the record-low 0.5%. This was unsurprising given the low level of inflation.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate dropped to a low of 18.4030 today.
South African Rand (ZAR) Exchange Rate Forecast to Edge Higher Versus the US Dollar as Eskom Look to End Rolling Blackouts
As traders await the Federal Open Market Committee (FOMC) minutes, due for publication later on Wednesday, the Rand strengthened versus the ‘Greenback’ (USD).
South African economic data produced a mixed bag of results on Tuesday. On the year, April’s Inflation Rate gained from 4.0% to 4.5%. On the month, inflation rose by 0.9%. The core measure ticked lower, however, from 5.7% to 5.6%.
March’s Retail Sales data was less impressive, however, with the yearly figure rising by 2.0%,considerably lower than the previous figure of 4.2%. On the month, Retail Sales declined by -0.5%.
Aiding the Rand’s appreciation was Eskom’s statement that the power grid will stabilise from next month. ‘We’re expecting Unit One of the Koeberg Power Station to come back online which will help us with an additional 130 megawatts. Later on in June we’re expecting about 800 megawatts from Medupi.’
Pound Sterling to South African Rand (GBP/ZAR) Exchange Rate Forecast to Trend within Narrow Range on Lack of Data
Given the absence of further data to provoke changes, the Pound Sterling to South African Rand (GBP/ZAR) exchange rate is likely to hold gains for the remainder of Wednesday’s European session. Thursday could see heightened GBP/ZAR volatility with the South African Reserve Bank (SARB) due to make its interest rate decision. There will also be several British data publications to be aware of on Thursday.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate climbed to a high of 18.5820 today.
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