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British Pound to Rand Exchange Rate Today - GBP ZAR is Climbing; SA Manufacturing in 5 Months of Contraction

September 2, 2014 - Written by Frank Davies

The British Pound to Rand exchange rate (GBP/ZAR) has been trending higher on Tuesday, following weak manufacturing figures yesterday pushing the Rand lower.

The UK also saw poor Manufacturing PMI which has fallen to a 14-month low, encouraging fears that the UK economic recovery could be balancing on a precipice.

Economist Martin Beck stated: ‘In early 2014, investment and exports offered solid support to GDP growth and reduced the economy’s reliance on consumer spending and the housing sector.

But there is now concern that the UK is in danger of repeating the problems of the past.’ With such uncertainty in the fate of the economic health of the UK, Sterling may remain volatile in the currency market for some time until favourable figures become more frequent.

The latest ZAR levels on the FX markets today:

- The Rand to Australian Dollar exchange rate is trading down -0.04% at 0.10032 ZAR/AUD.
- The Rand to Canadian Dollar exchange rate is trading down -0.09% at 0.10173 ZAR/CAD.
- The Rand to Euro exchange rate is trading down -0.55% at 0.07094 ZAR/EUR.
- The Rand to Pound Sterling exchange rate is trading up +0.02% at 0.05639 ZAR/GBP.
- The Rand to Lira exchange rate is trading up +0.11% at 0.20251 ZAR/TRY.
- The Rand to Dollar exchange rate is trading down -0.61% at 0.09310 ZAR/USD.
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South African Rand Falls to Low Exchange Rates after Manufacturing PMI

Overall production in the South African manufacturing sector has increased residing just under the 50 threshold that would indicate expansion in the industry. August revealed a 49 figure in the Kasigo Manufacturing Index after climbing by 3.1 index points, which has highlighted the effect of metalworking employees returning to work after a prolonged strike that lasted over a month. Kasigo representative Abdul Davids stated: ‘While demand in the broader economy remains weak, the slow return to the normal production levels in the platinum mining and metal sectors likely supported the improvement in new sales orders and business activity levels.’

However the manufacturing data has shown the fifth consecutive month of contraction in the industry, which furthers Rand instability. One expert in the field stated: ‘Rand fragility remains high. Persistently weakening growth has led to a market outlook on central bank interest rates which is increasingly shallow, reducing the medium-term value prospect of the Rand as an attractive carry destination.’

The Pound Trading Amid Scottish Independence Vote

The Pound conversely is presently shrouded with speculation as to the fate of the vote for Scottish independence, expected to take place on the 18th September. It appears the vote for independence is changing in popularity by residents in Scotland, now reportedly reaching 47% to vote yes down from the initial 61% in favour at the beginning of August. The UK government however has stated their lack of contingency plans in case the vote does swing in favour of independence. A spokesperson for the Prime Minister David Cameron stated: ‘No such work (is being) undertaken. The government’s entire focus is on making the case for the UK staying together.’

The fate of Scotland’s decision will have an effect on Sterling, as some believe the Pound could lose a percentage of its value. Whilst speculation circulates as to if Scotland and the UK could form a currency union, the debates are becoming more heated. Meanwhile, Cameron stated that he fears Scotland leaving, which is less than faith instilling for the UK economy. Cameron stated: ‘People can see the overwhelming opinion of businesses is that we are off if the UK stays together. But it is a massive decision, so it’s right to be both emotional and nervous.’

In the future of the Pound to Rand exchange rate, the UK will see the release of the Bank of England’s interest rate decision on Thursday, which is expected to remain at the forecast 0.50%. Friday however will see the release of the Bank of England Inflation figures for the next year released which may prove influential for Sterling. The Rand has no further data releases for this week making it liable to fluctuate in the GBP to ZAR currency pairing dependent on the strength of Sterling.

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