Pound Rand Exchange Rate (GBP/ZAR) Rides High After UK CPI; Forecast Awaits UK Retail Figures

May 20, 2014 - Written by David Woodsmith

STORY LINK Pound Rand Exchange Rate (GBP/ZAR) Rides High After UK CPI; Forecast Awaits UK Retail Figures

The South African Rand was buckling under the pressure on Tuesday and both the Rand to Pound and Rand to US Dollar exchange rates posted declines. The commodity-driven currency eased lower as a result of widespread risk aversion and the ongoing strike in South Africa’s all-important platinum mining sector.

The Pound Sterling to South African Rand exchange rate is trading up +1.15% at 17.62187 GBP/ZAR. The US Dollar to South African Rand exchange rate is trading up +0.98% at 10.46308 USD/ZAR.

In the view of Barclays Africa; ‘The Rand underperformed its emerging market peers on Monday, which we believe is a function of South Africa’s relatively challenging fundamentals, which include ongoing strike activity in the platinum sector.’

As the Rand tracks the Euro, speculation surrounding the prospect of additional European Central Bank fiscal stimulus also took a toll.

The Pound Sterling traded up on the UK inflation data

The Pound Sterling (currency:GBP), meanwhile, was trading in a stronger position against the majority of its currency counterparts thanks to a stronger-than-expected gain in UK inflation.

The UK’s consumer price index climbed by an annual 1.8 per cent in April, up from 1.6 per cent the previous month. Economists had anticipated an increase of 1.7 per cent. Month-on-month CPI rose by 0.4 per cent in April. A climb of 0.3 per cent had been forecast.

With inflation moving closer to the Bank of England’s 2 per cent target, Sterling broadly strengthened.

However, economist Samuel Tombs said of the result; ‘The rise in consumer price inflation in April should not be seen as a sign that the economic recovery is causing underlying price pressures to build. Instead, the increase in CPI inflation from 1.6 per cent to 1,8 per cent in April almost entirely reflects the impact of the later timing of Easter, which fell in April this year but in March last year’.

Despite some industry experts seeing this price gain as a blip, the Pound is likely to hold on to the gains inspired by the report in the hours ahead.

GBP to ZAR could see volatility tomorrow

Tomorrow volatility in the Pound to Rand exchange rate could be the result of UK retail sales figures and the release of minutes from the Bank of England’s latest policy meeting.

Of course South Africa’s domestic inflation report will also be of particular interest.

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TAGS: Pound Rand Forecasts Pound Sterling Forecasts South African Rand Forecasts