British Pound (GBP) Exchange Rate Forecast to Edge Lower against the South African Rand (ZAR) on Mixed UK Data
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate softened by around -0.3% on Thursday afternoon.
With the currency market still working to return to appropriate levels following the chaos of ‘Black Monday’, the Pound fluctuated versus its major peers. Although in some ways the British asset is an attractive prospect in terms of its minimal connection to China, speculation that the global economic slowdown will delay the Bank of England (BoE) normalising policy is weighing on demand. Many experts have now pushed back bets of a first-quarter hike in 2016 to the third-quarter.
UK data produced mixed results on Thursday, but the reports had minimal impact with markets still requiring readjustment to find justified currency values. On the year, Nationwide House Prices rose by 3.2% in August; bettering the market consensus of a 3.1% increase. However, on a monthly basis Nationwide House Prices only grew by 0.3% which was slightly below the median market forecast 0.4%. From a domestic perspective, rising house prices are spooking many industry experts. UK construction will need to improve dramatically if first-time buyers aren’t to be completely priced-out of the market.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate is currently trending in the region of 20.1920.
South African Rand (ZAR) Exchange Rate Forecast to Trend within a Tight Range against the UK Asset (GBP) after PPI Unexpectedly Slumped
One of the currency groups hit hardest by the ‘Black Monday’ chaos were emerging market assets. The South African Rand plummeted versus its major peers as panic selling fuelled trader risk aversion. In the days following Monday, however, the Rand appreciated versus its peers as bets a Fed rate hike will be delayed lent the currency support.
Comments from the South African Reserve Bank regarding the prospect of intervening in the currency market to defend the Rand also had an impact on trading.
On Thursday, Rand gains were slowed significantly after domestic data failed to impress. On the year, July’s Producer Price Index came in at 3.3%; well below the 3.9% median market forecast. On a monthly basis, Producer Prices only grew by 0.2% despite predictions of a 3.9% growth.
‘South Africa’s producer price inflation slowed unexpectedly in July after accelerating in the previous four months, figures from Statistics South Africa showed Thursday. The producer price index for final manufactured goods rose 3.3 percent year-over-year in July, slower than June’s 3.7 percent climb. Economists had expected the inflation to accelerate slightly to 3.8 percent. Prices in the utility sector surged 12.2 percent in July from a year ago, while mining prices declined by 8.7 percent,’ stated RTT News.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate dropped to a low of 20.0870 today.
Pound Sterling to South African Rand (GBP/ZAR) Exchange Rate Forecast to Hold Steady ahead of UK GDP
Given the absence of further data pertaining to either nation and with the market gradually settling, the Pound Sterling to South African Rand (GBP/ZAR) exchange rate is likely to continue trending within a tight range for the remainder of Thursday’s European session.
That being said, today’s US Q2 growth data could impact Rand trading. A strong revision to the level of output recorded in the three months through June would reignite hopes for a 2015 rate revision and limit demand for higher-risk assets.
Friday is likely to see GBP/ZAR volatility with UK Consumer Confidence and Gross Domestic Product data due for publication. A complete absence of South African economic data should see the Rand subject to changes in market sentiment.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate reached a high of 20.3050 during Thursday’s European session.
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