Rand Exchange Rate Forecasts: GBP ZAR Rate Falls Today as Sterling Continues to Falter

November 12, 2014 - Written by Tim Boyer

STORY LINK Rand Exchange Rate Forecasts: GBP ZAR Rate Falls Today as Sterling Continues to Falter

The British Pound to Rand exchange rate was holding ground on Tuesday despite the publication of stronger than forecast manufacturing production data.

Earlier in the session, the Pound received support from the publication of retail sales data.

Before we continue, here's the latest ZAR rates today:

The Pound to Rand exchange rate today is converting +0.07 per cent higher at 17.86932 GBP/ZAR.
The Euro to Rand exchange rate today is converting +0.02 per cent higher at 14.00216 EUR/ZAR.
The US Dollar to Rand conversion rate is -0.36 pct lower at 11.22463 USD/ZAR.
The Hong Kong Dollar to Rand conversion rate is -0.37 pct lower at 1.44745 HKD/ZAR.

The report released by the British Retail Consortium showed that retail spending in the UK recovered modestly in October as Halloween led to an increase in buying and furniture sales rose.

The BRC said that retail spending increased by 1.4% compared to the same month last year and was an improvement on September’s fall of 0.8%, the steepest annual drop recorded since April 2012. Despite the improvement in total spending, like for like retail, sales were flat following the 2.1% fall seen in September.

The report also showed that clothing and food stores struggled as warm autumn weather kept shoppers away from buying cold weather clothing and as the nation’s major supermarkets continued to wage a price war. Retailers such as Tesco and Wal-Mart's Asda try to fend off German discount chains Aldi and Lidl, which have increased their market share recently.

Rand to Pound Exchange Rate Reclaims Ground

The South African Rand then reclaimed some ground against Sterling and other peers after data released by Statisitcs South Africa showed that manufacturing production rebounded strongly in September.

Production soared by 8% on a year on year basis, reversing the revised drop of 1% recorded in the preceding month and smashing forecasts for a fall of -0.9%. Month on month production increased from a revised figure of 2.55% to 4.0%.

‘4% is impressive and a reflection of the recent improvement in the Kagiso purchasing managers index (PMI) which gauges activity in the manufacturing sector.

The PMI has shown that manufacturing is on the mend from strike difficulties in the first half of the year. This should carry on through into the fourth quarter and lend some support to GDP (gross domestic product) growth in the fourth quarter,’ said Jeff Schultz, economist from BNP Paribas Cadiz.

Despite the strong data, the Rand was unable to make further gains as the resurgent US Dollar weighed on demand for riskier assets. A better than forecast NFIB Business Optimism Index released out of the US lent more support to the US currency.

Sterling meanwhile was holding onto gains as investors look ahead to Wednesday’s UK employment data, which economists expect, will show that average earnings improved and unemployment fell from 6% to 5.9%.

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