Pound (GBP) Exchange Rate Climbs on Hawkish Comments from BoE’s Forbes
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate advanced by around 0.3% on Monday afternoon.
In response to hawkish comments from Bank of England (BoE) Monetary Policy Committee (MPC) member Kristin Forbes, the Pound rallied versus its major rivals. Forbes warned that holding the cash rate at the record-low 0.5% for much longer could have an adverse impact on Britain’s economic progress. She argued that the UK’s growth of 0.7% in the second-quarter was the ‘long-run average before the financial crisis,’ and rates should rise to accommodate accelerating growth.
‘The UK was the fastest growing economy in the G7 in 2014, and is expected to be one of the two fastest growing economies in 2015 (along with the US),’ she added. ‘The underlying rate of wage growth may be even stronger, as more new hires have been in lower paying sectors and for workers with less experience and qualifications – groups that have had the greatest challenge finding employment.’
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate is currently trending in the region of 20.0790.
South African Rand (ZAR) Exchange Rate Tracks Euro Weakness
With the single currency holding a position of weakness, having devalued considerably over the past six months, the Rand is trending in a low position despite improved market sentiment. In addition, demand for emerging-market currencies slumped with commodity prices dropping and fears regarding China’s economic slowdown growing. The Rand has, however, avoided a larger depreciation thanks to improvement with the nation’s largest energy provider Eskom, which has avoided load shedding whilst performing maintenance for the longest period since issues surfaced.
Additional downward pressures can be connected to increased speculation regarding a near-term Federal Reserve benchmark rate hike. Although the prospect of a September Fed rate increase has opinions divided, most expect that central bank to liftoff within 2015. Also, the South African Reserve Bank (SARB) has warned of tough times ahead, stating; ‘the global economy is entering into new unchartered waters with the prospect of normalization in the US and a slowdown in China, impacting on commodity prices.’
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate dropped to a low of 20.1970 today.
Pound Sterling to South African Rand (GBP/ZAR) Exchange Rate Forecast to Hold Gains ahead of UK CPI
Given the lack of further domestic data publications to provoke changes, the Pound Sterling to South African Rand (GBP/ZAR) exchange rate is likely to hold gains for the remainder of Monday’s European session.
Tuesday will be of significance for the pairing with British inflation data due for publication. Rate hawks will be hoping the Consumer Price Index moves away from the current 0.0%. An absence of South African data will see the Rand subject to changes in response to market sentiment and US Dollar positioning ahead of this week’s SA inflation and retail sales numbers.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate reached a high of 20.1970.
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