The Pound Sterling to South African Rand (GBP/ZAR) exchange rate ticked lower by around -0.33% on Wednesday morning.
After British economic data produced disappointing results on the whole, the Pound softened versus the majority of its most traded currency rivals. Additional depreciation is as a result of political uncertainties as we draw closer to the general election. Minutes from the most recent Bank of England (BoE) policy meeting also added downward pressure on Sterling as policymakers highlighted inflation as a reason to delay rate hikes.
The South African Rand, meanwhile, edged higher than many of its major rivals thanks to positive results from inflation data. Additional appreciation can be attributed to a report which showed fourth-quarter growth outstripped previous quarters significantly.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate is currently trending in the region of 18.1440.
Pound Sterling (GBP) Exchange Rate Softens on Political Unknowns
With the forthcoming general election showing signs of being the most closely contested in modern political history, uncertainties regarding policy has seen investor confidence wane significantly.
The Sterling declination was compounded by minutes from the latest policy meeting in which all policymakers stood behind Governor Mark Carney’s view of maintaining the ultra-low cash rate until such time as inflation shows signs of recovery.
‘Although monetary policy at home and abroad was only one of the many factors that influenced the exchange rate, especially in the near term, there was a risk that divergent monetary policy trends, as well as stronger prospects for growth in the United Kingdom than in the Euro area, might continue to put upward pressure on the Sterling exchange rate,’ the minutes read.
British economic data disappointed on Wednesday, with particular reference to cooling wage growth. ‘The lack of wage growth leaves the economy vulnerable to setbacks, especially as growth has one again become all-too dependent on consumer spending, which is in turn reliant on low inflation,’ said Chris Williamson, chief economist at data provider Markit.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate has fallen to a low of 18.1090.
South African Rand (ZAR) Exchange Rate Ticks Higher on Fourth-Quarter Expansion
Tuesday saw the Rand appreciate versus many of its most traded currency peers. This was due to a report which indicated that domestic economic growth in the fourth-quarter far outstripped previous growth. ‘Real domestic final demand maintained its upward momentum in the final quarter of 2014, led by higher growth in both household consumption expenditure and aggregate capital spending. Relatively favourable prices partly encouraged a notable increase in expenditure on durable and semi-durable goods over the period. Higher spending on non-durable goods partly reflected the benefit of some windfall gains following lower domestic petrol prices,’ stated the report.
Wednesday’s data also printed impressively. The Core Inflation Rate reached 5.8% in February, advancing from the previous figure of 5.78%. On the year, inflation dropped a little from 4.4% to 3.9%, but February’s monthly inflation rate advanced by 0.6%; eclipsing the previous declination of -0.2%.
Pound Sterling to South African Rand (GBP/ZAR) Exchange Rate Forecast to Hold Losses
Given the lack of domestic data to curb the trend, and with the many varied factors adding downward pressure on the British asset, the Pound Sterling to South African Rand (GBP/ZAR) exchange rate is likely to hold losses for the remainder of Wednesday’s trade.
Thursday is likely to see cooling GBP/ZAR volatility as there will be no data publications pertaining to either nation.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate advanced to a high of 18.2920 today.
