Pound to South African Rand Exchange Rate News: GBP/ZAR Advances ahead of UK GDP Report

Pound to South African Rand exchange rate chart

As South African markets were closed for a public holiday on Monday, Rand movement was a little restrained – but with the British Pound supported by UK growth expectations the GBP/ZAR pairing advanced.

On Friday the Rand approached a three-week low against the US Dollar as Ukraine concerns persisted and investors shifted positions before the extended weekend. The commodity-driven currency was also struggling against the Pound as the British asset was boosted by better-than-forecast UK retail sales figures.

The Pound consolidated and extended gains against several of its peers as a new week of trading began and investors bet that Tuesday’s UK GDP report would show expansion of 0.9 per cent in the first quarter of the year.

If the UK economy expands at that pace it will be the fastest rate of quarterly growth for four years.

While the Bank of England’s latest policy statement was fairly neutral, the central bank did positively revise its growth forecasts for the UK and the institution actually expects expansion of 1.0 per cent in the first three months of 2014. The MPC noted; ‘The domestic recovery was building momentum, with some signs of a modest rebalancing toward investment.’

However, emerging-market currencies like the Rand did derive some support on Monday from an easing in Ukraine-based tensions.

Although President Barack Obama outlined new Russian sanctions, the situation didn’t escalate as many had feared it would, and higher-risk currencies gained as a result.

The US government has introduced sanctions on 17 major Russian companies and 7 influential Russian people in an attempt to force Russia into honouring its Geneva commitments.

According to one New York-based forex strategist; ‘There was caution heading into the weekend about geopolitical developments [so] the lack of new significant developments is causing a reversal of the Friday effect. You’re seeing that unwinding as we come out of the weekend.’

In the week ahead the main South African data to be aware of are the nation’s trade balance figures (due out on Wednesday) and KAGISO manufacturing PMI (scheduled for publication on Thursday).

Economists have forecast that the manufacturing gauge advanced from 50.3 in March to 50.6 in April.