Pound to Rand Exchange Rate Forecast: GBP/ZAR Higher on Commodity Concerns and stronger US Dollar

December 2, 2014 - Written by Toni Johnson

STORY LINK Pound to Rand Exchange Rate Forecast: GBP/ZAR Higher on Commodity Concerns and stronger US Dollar

The Pound held onto gains against the South African Rand despite UK data raising concerns that the nation is likely to face an economic slowdown over the coming months.

The Rand meanwhile weakened due to a strengthening US Dollar and concerns over commodity prices and the wider global economy.

ZAR Rates Today

The Rand to Australian Dollar exchange rate is -0.78 pct lower with a conversion rate of 1 ZAR equals 0.10635 AUD.
The Rand to Canadian Dollar exchange rate converts -0.35 per cent lower at 1 ZAR is 0.10254 CAD.
The Rand to Euro exchange rate converts -0.41 per cent lower at 1 ZAR is 0.07259 EUR.
The Rand to Pound exchange rate converts -0.5 per cent lower at 1 ZAR is 0.05748 GBP.
The Rand to US Dollar exchange rate converts -1.09 per cent lower at 1 ZAR is 0.08990 USD.

According to Markit/CIPs construction purchasing managers’ index report, activity in the UK construction sector slowed by its slowest pace in more than a year, adding to signs that a slowdown in the Eurozone is beginning to hamper growth of the G-7’s fastest growing economy. The PMI fell to 59.4 in November, down from October’s figure of 61.4 and was worse than economist expectations for a reading of 61.

‘A less favourable overall economic news flow was cited as the key factor dampening otherwise buoyant demand patterns across the UK construction sector. However, some construction companies noted that uncertainties ahead of next year’s general election had weighed on business confidence and influenced clients’ willingness to commit to new projects,’ said Tim Moore, senior economist at Markit.

Despite the negative UK data, the Rand was unable to edge higher and instead weakened as data out of the USA buoyed demand for the US Dollar. A report released by the Washington based Commerce Department showed that construction spending in the world’s largest economy increased by 1.1% to an annual rate of $970.00 billion, the biggest increase seen since May. The positive report suggests that the US economy will avoid a sharp downturn in the fourth quarter and that GDP will not be weakened too much.

Also supporting the US Dollar was the publication of the latest ISM New York Index, which came in better than forecast. The index came in at 62.4, beating forecasts for a figure of 60.5.

Rand Exchange Rate Forecast

The South African Rand weakened due to a lack of domestic data releases sending South African traders looking overseas for direction. Also weighing upon the currency are concerns over the nations faltering electricity infrastructure and concerns over its huge current account deficit.

‘The Rand’s vulnerability stems from the large current account deficit. The South African Reserve Bank’s monetary policy review noted this and indicated that the bank expects ongoing Rand volatility and a weakening bias. Yet normalisation is expected to be very gradual, leaving the unit susceptible if the US Federal Reserve were to embark on earlier monetary tightening,’ said an economist from Rand Merchant Bank.

The only report that was released showed that new vehicle sales in South Africa fell sharply in November from 59113 to 51098.

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