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Pound to Rand Exchange Rate Today: GBP/ZAR Falls as Inflation Data Fails to Impress

November 18, 2014 - Written by James Fuller

The Pound Sterling to Rand (GBP/ZAR) exchange rate was weaker after UK inflation data showed that inflation remained near a five-year low, increasing speculation that the Bank of England will leave interest rates at the record low level of 0.5%.



rand exchange rate outlook vs poundAccording to the Office for National Statistics (ONS), UK inflation increased from 1.2% to 1.3% in October.

The data failed to support the Pound Sterling (GBP) as economists considered the rise a blip and that inflation would once again decline over the coming six months.

The Pound to South African Rand exchange rate is -0.9 pct lower at 17.24066 GBP/ZAR.
The Euro to Rand exchange rate converts -0.2 per cent lower at 1 EUR is 13.82447 ZAR.
The US Dollar to Rand exchange rate is -0.86 pct lower with a conversion rate of 1 USD equals 11.02975 ZAR.

BoE governor Mark Carney warned that inflation would fall below the 1% level.



‘October’s uptick in inflation is largely a function of base effects and movements in volatile categories.

Otherwise, the inflationary trend is downward and there is a good chance that the CPI measure will drop back again over the next couple of months.

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It looks increasingly likely that inflation will dip below 1% in the early months of 2015, which would lead to a letter of explanation from Mark Carney to the Chancellor.

Against this backdrop, and given the increasingly dovish mind-set of the majority of the MPC, it is unlikely that they will even contemplate an increase in interest rates in the near-term.

Indeed, the risks are becoming increasingly skewed towards a lengthy period of inaction,’ said Martin Beck, senior economic advisor to the EY Item Club.

Rand Advances vs Pound, Euro and US Dollar Exchange Rates



The South African Rand meanwhile advanced as higher yielding currencies increased due to demand from investors looking for better returns on their money.

‘The Rand is stronger because high yields are in vogue at the moment,’ said David Gracey, a currency trader at Investec Bank.

Dollar to Rand Exchange Rate Today: Best Rates in Two Weeks



Against the US Dollar, the Rand strengthened to its best conversion level in two weeks as investors favoured riskier assets even as Japan slid into recession.

The Rand will likely experience movement on Wednesday as domestic inflation data is due to be released, whilst on Thursday the South African Reserve Bank is due to announce its latest interest rate decision. The announcement will be the last one of the year. The majority of traders are forecasting that the bank will choose to leave interest rates unchanged at 5.75%.

Despite the currency finding some support it remains under heavy pressure from concerns over South Africa’s unstable electricity supplies, budget and current account deficits and recent credit downgrades.

The Rand could make further gains against the Pound later in the week if the Bank of England Minutes release shows that policy makers are growing increasingly dovish.
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