Pound Rand Exchange Rate Forecast Further Gains, Pound to Euro Recovers

January 27, 2014 - Written by Ben Hughes

STORY LINK Pound Rand Exchange Rate Forecast Further Gains, Pound to Euro Recovers

The Pound euro exchange rate (currency : GBP/EUR) enjoyed a strong session today, clawing back a large part of the Carney-induced losses which it incurred on Friday. The Bank of England Governor’s Davos comments, which suggested that Britain’s base rate of interest may not necessarily be increased even the level of UK joblessness continues to rapidly drop, held back the UK unit during the final session of last week. At one point on Friday it looked likely that GBP EUR would fall back below the psychologically-key 1.2000 threshold – the pair had been changing hands in the mid-1.2200s during the middle part of the week following strong British jobs figures.

Today’s recovery back up to as high as 1.2136 for GBP EUR suggested that the pair was near-term oversold at the end of last week, particularly as there were no tier one data releases in either the eurozone or the UK on the day today. The shift higher for GBP EUR since the market re-opened last night would appear to be technical in nature. However the pair would need to chalk consecutive closes above last Wednesday’s 12-month high of 1.2243 in order to confirm its extant uptrend. In the meantime, the jury is out.

Elsewhere, the GBP ZAR exchange rate registered yet another multi-year high today, topping out at 18.6384 earlier. The Rand continues to struggle following last week’s comments from Finance Minister Pravin Gordhan stating that South Africa’s economy was not strong enough to weather any continuation of the labour market dispute which has dogged it for much of the past two years. These strong words have weighed heavily on the South African tender, causing GBP ZAR to climb sharply from last Monday’s trading rates below the 17.8000 level. It would appear highly likely that the move against the Rand, which began in earnest some three years ago, has run its course yet. If the US Federal Reserve announces on Wednesday evening that it is lopping another $10bn off the $75bn per month which it currently commits to its Quantitative Easing programme, then look for GBP ZAR to motor on towards the 20.0000 threshold.

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