Pound to South African Rand (GBP/ZAR) Exchange Rate Dims Before Wednesday’s Big News

Pound to South African Rand exchange rate chart

With investors adopting a cautious stance before tomorrow’s UK employment data, the Pound is struggling against several of its major peers.

Consequently, the GBP to ZAR exchange rate drifted lower during local trading despite the Rand coming under its own pressures.

The Rand was weaker against its US peer ahead of the publication of South Africa’s inflation and retail sales figures, both of which are due out tomorrow.

Industry experts have forecast that the South African currency could edge even lower against the ‘Greenback’ if today’s US consumer price index for February is stronger-than-forecast.

US building permits and housing starts figures could also have an impact if they surprise to the upside.

Economists have projected that building permits increased by 1.6 per cent month-on-month following a positively revised decline of 4.6 per cent in January.

Housing starts are believed to risen by 3.4 per cent on the month.

Of course the upcoming Federal Open Market Committee policy decision is also piling pressure on emerging market assets like the Rand.

According to one Barclays Africa analyst; ‘We see the balance of risks as tilted towards continued Rand weakness, but acknowledge that participants might only want to commit after some of Wednesdays events.’

South African retail sales are expected to be up 2.9 per cent on the year following the previous month’s 3.5 per cent annual gain.

The nation’s inflation rate is forecast to have advanced by 0.7 per cent month-on-month.

Meanwhile, the Pound/Rand exchange rate is also likely to fluctuate as a result of the UK’s jobs data and the publication of minutes from the Bank of England’s policy meeting.

An upbeat UK employment gain could help the Pound advance and recover ground against rivals like the Rand.

Yesterday Morgan Stanley insinuated that this week’s UK reports could boost the Pound, stating; ‘We could see some of the more hawkish views, regarding slack in the economy, starting to become apparent in the minutes, which should provide Sterling with some support. The Pound could also gain from some safe-haven flows in the expected risk-off environment’.

In summary, the Rand is likely to continue trading higher against the Pound for the rest of the day, but could soften further against the US Dollar if US data impresses.