Demand for the Rand exchange rates slumped sharply on Tuesday in response to October’s M3 money supply report, which suggested that inflationary pressure within the South African economy has continued to mount.
Coupled with the news that President Jacob Zuma has survived a rebellion within his own party this helped to put the GBP/ZAR exchange rate on a bullish run.
GBP/ZAR crashed over Monday’s trading session, after news broke that Zuma is to face another no-confidence vote.
Other reasons for the South African rand’s significant rally against the global currencies include solid metal prices say UniCredit:
“The rand continues its stellar run, gaining over 2.5% against the USD yesterday, outperforming all other currencies. The fact that Moody’s did not follow up with a downgrade on Friday probably helped. However, in our view, it is the continued bid under industrial metal prices that has been the main driving force.”
Foreign exchange traders also took a slip in demand for the US Dollar, as well as uncertainty over oil prices, as an opportunity to buy up the Rand while they could.
Wednesday will be a vital session for GBP/ZAR, as either South Africa’s latest trade balance result or OPEC’s oil producer meeting could significantly alter ZAR exchange rates.
Current Pound Sterling South African Rand (GBP ZAR) Exchange Rates
On Tuesday the Pound to South African Rand exchange rate (GBP/ZAR) converts at 17.475
FX markets see the south african rand vs pound exchange rate converting at 0.057.
At time of writing the south african rand to euro exchange rate is quoted at 0.067.
At time of writing the south african rand to us dollar exchange rate is quoted at 0.071.
Please note: the FX rates above, updated 29th Nov 2016, will have a commission applied by your typical high street bank. Currency brokers specialise in these type of foreign currency transactions and can save you up to 5% on international payments compared to the banks.
GBP/ZAR could rally this Wednesday
GBP could climb against the ZAR this coming Wednesday, assuming that trade balance forecasts prove accurate.
Sterling has crashed against the Rand today, but could rise in the pairing if Wednesday’s South African trade surplus falls as expected.
A slide into the deficit range has been predicted, which might result in Sterling gaining a leg-up against the volatile South African Rand.
GBP/ZAR fluctuated wildly this week as fresh uncertainty over ‘Brexit’ and the ongoing political scandals in South Africa weighed greatly on their respective currencies.
Morgan Stanley analysts, however, suggest the South African rand has benefited recently:
“Recent political developments in South Africa have helped the rand to recover, as investors are starting to price in a scenario that involves less political infighting and potentially more focus on reform.”
“We agree that developments appear to be heading in this direction but caution that bond market positioning is heavy and the market will not be immune to UST market volatility.”
British Pound (GBP) Yo-yos vs Rand (ZAR) Last Week
The Pound’s initial losses were caused profit taking as investors looked to cash out their gains from Sterling’s recent advance.
However the exchange rate quickly bounced back as UK Prime Minister Theresa May spoke at the annual CBI conference hinting that the UK government may seek a transitional agreement with Europe, which would allow British businesses to stay part of the single market after ‘Brexit’ while the UK negotiates a new trade deal with the EU.
There was further instability with the release of Philip Hammond’s first Autumn Statement as UK Chancellor as the Pound slumped ahead of its release as investors predicted a gloomy outlook for the British economy.
Sterling Rallied after the statement however as despite some negative data like a £122billion ‘black hole’ in public finances, markets were upbeat about the Chancellors plans to increase transport and digital infrastructure spending in order to attract more investment to the UK post-‘Brexit’.
South African Rand Rocked by Political Instability
The South African Rand was strengthened at the beginning of the week’s session as the US Dollar’s recent climb appeared to cool, alleviated fears that a stronger ‘Greenback’ could cause South Africa’s domestic borrowing costs to increase.
Meanwhile the Rand to Pound exchange rate has become increasing unstable over the week as South African President Jacob Zuma prepares to face an ANC integrity panel, with the ruling party planning to quiz its leader about persistent allegations of corruption.
Zuma’s alleged behaviour has placed a great deal of pressure on the South Africa Rand in recent weeks, with independent observers claiming that the President was behind the fraud allegations against the much respected Pravin Gordhan due to an ongoing feud with the Finance Minister.
There are fears that the panel could deepen divides in the already fractured party, leading to further infighting even under a new leader.
Other ZAR Currency Exchange News
- The Pound to Rand: Sell-off of EM Currencies like MXN, ZAR Exchange Rates to Continue
- Pound to Rand Exchange Rate: ZAR Forecast to Fall vs GBP, USD Say Barclays
- Currency Exchange Rate Forecasts for the GBP, EUR, NZD, AUD and the ZAR
- Pound to Rand Exchange Rate: Slight Recovery in GBP/ZAR’s Value as SA PMI Dents ZAR Appeal
- British Pound to Rand Forecast: 2% Fall for GBP/ZAR Exchange Rate on EM Currency Recovery
GBP ZAR Exchange Rate Forecast: Growth in GDP may Allow Pound to Advance
The Pound vs Rand Exchange rate may be able to advance next week thanks to Britain’s recent GDP report, which rose from 2.1% to 2.3%, helping to alleviate fears that the UK’s vote to leave the EU would have a detrimental effect on the British economy.
Looking to next week’s data, Sterling may gain on Wednesday if Gfk’s consumer confidence report manages to exceed expectations that it will rise from -3 to -1 in November as a positive figure would be the survey’s highest since before ‘Brexit’.
Meanwhile the South African Rand could slide if the political climate causes South Africa’s own consumer confidence to tumble on Monday.