The Pound Sterling to South African Rand (GBP/ZAR) exchange rate was trending lower by around -0.42% on Tuesday morning.
With the general election fast approaching, the outlook for the Pound is cloudy amid political uncertainties. This has seen a general reluctance to invest heavily in the British asset, causing the Pound to soften versus many of its major peers, especially with a complete lack of domestic data to drive changes.
The South African Rand, meanwhile, strengthened versus many of its most traded currency rivals as a result of the domestic current account deficit narrowing. A soft US Dollar also aided the emerging-market asset with market sentiment improving after the European Central Bank (ECB) stated that quantitative easing in the Eurozone was having a positive effect, even at this early stage.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate is currently trending in the region of 18.3100.
Pound Sterling (GBP) Exchange Rate Edges Lower as General Election Approaches
The forthcoming general election is promoting a sense of uncertainty amongst traders, who are showing increased reluctance to invest. The potential for a dramatic change in policy is heightened this time around as several political parties are calling for a change in Britain’s relationship with Europe.
Given that the election has been described as the most hotly contested in modern political history, amplified political uncertainty is weighing heavily on the British asset.
Tuesday’s Sterling declination is not only as a result of political unknowns, but also thanks to a complete absence of domestic data to drive changes. Recent dovish remarks from the Bank of England (BoE) with regards to policy adjustment are also adding downward pressure.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate has fallen to a low today of 18.2560.
South African Rand (ZAR) Exchange Rate Trending Higher as US Dollar Slumps
Recent US Dollar bearishness has been beneficial for emerging-market currencies. In conjunction with a dip in oil prices, demand for the South African Rand increased significantly on Tuesday morning.
The South African Reserve Bank (SARB) current account showed the deficit narrowed in the fourth-quarter, having risen from -223 billion to -198 billion. The large deficit is still of concern to many experts, however. ‘The persistently wide current-account deficit is a perennial concern for South Africa,’ Phoenix Kalen, a London-based strategist at Societe Generale SA, said by phone on March 13. ‘The capacity constraints in energy supply are aggravating the situation, limiting the country’s output and constraining the pace of improvement.’
Pound Sterling to South African Rand (GBP/ZAR) Exchange Rate Forecast to Hold Losses
Given the complete absence of domestic data to provoke changes, and with political uncertainty weighing heavily on demand for the British asset, the Pound Sterling to South African Rand (GBP/ZAR) exchange rate is likely to hold losses for the remainder of Tuesday’s trade.
Wednesday will see GBP/ZAR volatility with several influential data publications pertaining to both nations due. South African inflation data and British labour market data will be of significance to those invested in either asset.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate climbed to a high of 18.4140 today.
