The Pound Sterling to South African Rand (GBP/ZAR) exchange rate rallied by around 0.84% on Tuesday morning.
Given that many analysts expected the European Central Bank (ECB) to fail to source the requisite bonds to finance quantitative easing on such a massive scale, Monday’s launch was well received. The injection of liquidity is seen as beneficial for the British economy as it the European Union is the UK’s largest trading partner. This caused the Pound to strengthen versus most of its major competitors despite disappointing sales data.
The South African Rand, meanwhile, softened after the US Dollar recovered losses from profit-locking. Additional Rand declination can be attributed to declining business confidence with the lack of energy supply weighing on day-to-day business activity.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate is currently trending in the region of 18.4440.
Pound Sterling (GBP) Exchange Rate Gains on Eurozone QE
As explained above, the launch of QE in the Eurozone is seen as beneficial for the UK, its largest trading partner. ‘Record lows in financing costs, the gradual turn in the credit cycle, the largely successful conclusion of the stress-test exercise and the ongoing repair of bank balance sheets indicate that the more aggressive ECB policy will gradually reach the real economy over time,’ Holger Schmieding, economist at Berenberg Bank, wrote in a note to clients.
Sterling gains have been somewhat slowed, however, with sales data failing to meet with expectations. BRC Like-For-Like Sales showed growth of 0.2% on the year, failing to meet with the median market forecast of 0.5% in February.
‘Activity on the high street has settled into a monotonous equilibrium, with falling like-for-like food sales persistently wiping out any meaningful like-for-like growth the non-food sector manages to achieve. February’s figures are also against very weak comparables, when bad weather caused sales to stall last year,’ said David McCorquodale of KPMG.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate dropped to a low today of 18.2500.
South African Rand (ZAR) Exchange Rate Softens on Waning Business Confidence
The well reported issues regarding South Africa’s energy crisis, with the leading provider Eskom struggling to maintain outdated machinery in order to provide electricity to the nation, caused business confidence to slump in the first quarter.
‘A consumer theme of sorts is re-emerging to the benefit of certain retailers and wholesalers, as well as new-vehicle dealers,’ said Ettienne le Roux, chief economist at RMB. ‘This is just as well, as such service-oriented sectors are less energy intensive than manufacturing, which is a loser in the context of current electricity shortages and muted global trade that continues to hamper exports.’
Pound Sterling to South African Rand (GBP/ZAR) Exchange Rate Forecast to Trend Higher
With South Africa’s energy crisis showing no signs of abating, the Pound Sterling to South African Rand (GBP/ZAR) exchange rate is likely to hold gains for the remainder of Tuesday’s trade. There is potential for Sterling volatility later on Tuesday with Bank of England (BoE) Governor Mark Carney due to make a speech.
An absence of South African data on Wednesday ought to see a continuation of the Rand’s downtrend given the lack of ecostats to curb the trend. There is a possibility of recovery however if the US Dollar softens.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate climbed to a high today of 18.4520.
