Investor Sentiment Soars, Losses Forecast for Pound Sterling South African Rand Exchange Rate

February 25, 2015 - Written by John Cameron

STORY LINK Investor Sentiment Soars, Losses Forecast for Pound Sterling South African Rand Exchange Rate

A day of significant market movement yesterday was dominated by the news that the eurogroup had rubber-stamped a 4-month extension to Greece’s emergency loan deal. In the end, it didn’t take much for the euroland’s collected Finance Ministers to consent to the lengthening of Greece’s terms – the Athens administration promised to crack down on domestic tax evasion and stamp out tobacco smuggling.

The markets, however, breathed a significant sigh of relief at the news and the increase in appetite for risk sent London’s benchmark FTSE 100 share index close at a fresh all-time high of 6,949.63, which easily eclipsed its previous peak of 6,930.20 which it touched at the end of the last millennium.

The move was significant due to the length of time the previous record had stood for – slightly over 15 years.

Elsewhere, there was positive news for the South African Rand (currency:ZAR) on the day as official government figures revealed that South Africa’s economy expanded by a greater than anticipated year-on-year 4.1% during the final three months of 2014.

The news sent the Pound Sterling to South African Rand exchange rate down to 17.7357 during afternoon trading.

Analysts had been expecting a showing of only 3.8%, so the news strongly favoured the Rand.

The strong bounce in South African GDP was driven by the first expansion in the nation’s manufacturing output for some four quarters, while an increase of over 15% in mining and extraction production following the easing of labour tensions in this key industry also helped.

Losses for GBP ZAR would surely have been of a greater magnitude were it not for ongoing fears regarding a potential blackout across Africa’s second most economically developed nation.

Francois Stofberg of Efficient Group observed yesterday that, ‘we are still waiting to see what will happen with the electricity shortages and how that will affect the economy. That will be the biggest determinant of how the economy will perform this year.’

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