Pound to South African Rand (GBP/ZAR) Exchange Rate Moves away from 4-Week High

Pound to South African Rand exchange rate chart

On Thursday the Rand began the local session ever so slightly softer against the Pound and US Dollar.

The South African currency approached a one-month low against Sterling yesterday as a result of Ukraine-inspired risk aversion, Chinese slowdown concerns and domestic strike woes. The Rand remained weaker against peers like the Pound following the release of South African inflation data.

However, over the last few hours the Rand has been able to recover some ground.

Although a stronger-than-forecast UK CBI reported sales report supported the Pound, the news that South Africa’s producer price index came in above expectations gave the Rand a boost.

The nation’s PPI was forecast to have increased by 7.7 per cent in March, year-on-year, but it actually surged by 8.2 per cent – adding to the case for the Reserve Bank of South Africa introducing an interest rate hike.

The Rand edged up against the US Dollar, Euro and Pound after the figures were released.

According to the Rand Merchant Bank; ‘The shorter-dated forward rate agreements are now pricing in a 70% chance of a 50-basis point move at the Reserve Bank’s monetary policy committee meeting in May.’

Before the weekend the Pound could recover losses against the Rand if UK retail sales figures surprise expectations.

Although economists have predicted a 0.4 per cent month-on-month decline in March after an increase of 1.7 per cent in February, recent reports indicate that the UK’s retail sector may have performed fairly well last month.

Earlier today CBI figures showed that the UK retail sales industry was boosted thanks to the delayed Easter weekend. The unforeseen jump from 13 to 30 saw CBI representative Barry Williams comment; ‘The latest survey echoes the current drumbeat of positive economic news. The trick now is for this to become a consistent theme, and deliver much needed support to household spending and economic growth in the months ahead.’

A surprise retail sales gain could boost the Pound on Friday.