British Pound to Rand (GBP/ZAR) Exchange Rate Higher on South African Mining Data

Modified: Thursday, 10 July 2014 13:12 BST - Written by Tim Boyer

STORY LINK British Pound to Rand (GBP/ZAR) Exchange Rate Higher on South African Mining Data

Weaker than forecast South African data has sent the Pound to Rand (GBP/ZAR) exchange rate 0.43 per cent stronger today, as the SA currency plunges against Sterling, US Dollar and other global exchange rates.

Earlier in the week, the Rand remained bullish against the Pound as ongoing unsettlement in South Africa continues to reign; the Sterling is currently trading at 18.2890 against the South African currency.

South Africa may have eased fears of a prolonged NUMSA strike by stating that a resolution was in sight; however, anxiety may not be reduced for long, with further unrest revealing Eskom workers at the South African electricity company are now showing interest in strike action. South Africa’s NUM—National Union of Mineworkers—have suggested Eskom was ‘sitting on a time bomb’ if employers denied Eskom employees the option to strike.

The Pound to Rand exchange rate is trading up 0.43 per cent at 18.39196 GBP/ZAR (updated 10/07/2014).

Representative for NUM, Frans Baleni stated: ‘If doctors can strike in South Africa, why can’t Eskom workers strike? Our members are angry. Eskom is sitting on a time bomb.’

As investors began to feel comforted that the latest strikes would come to a swift end, new speculations of additional strikes have quashed hope for a stable Rand in the near future. A representative for the labour department, Mokgadi Pela, stated: ‘Talks are at a very advanced and sensitive stage. We are close to an agreement when it comes to wage percentages but the reason we are saying talks are at a sensitive stage as we are trying to address sticky issues.’ However, less encouraging was NUMSA spokesperson Mphumzi Maqungo who commented that it was the government: ‘who convened the meeting. They said they want to meet with us, so we have not refused to meet with them. Whoever wants to resolve the strike, we will listen to them.’ With instability in South Africa hindering any attempts of a stable Rand, Moody’s have also suggested that the country’s credit rating will be volatile with the amount of work stoppages experienced in 2014.

Thursday will prove an interesting day for the South African Rand regarding data releases as Manufacturing Production and Mining Production statistics are released.

The Pound Sterling (GBP) has also seen disappointment today with manufacturing output diving in May’s statistics. The Industrial Production figures fell to 2.3% from April’s 2.9% YoY, whilst the forecast was set to reach 3.2%. Alongside, Manufacturing Production was revealed showing a drop to 3.7% from the former 4.3%, despite a hike to 5.6% forecast by economists.

The UK is awaiting important interest rate discussions this week, in the hope of gaining some clarity from the Bank of England after previous statements have caused confusion as to the immanency of such rate hikes. An expert in the field, Valentin Marinov for Citigroup stated: ‘The key question is to what extent the date should be seen as a precursor of potential loss of growth momentum further down the road. We do not think that is the case, however.’ With the UK thriving off the back of a string of positive statistics, Tuesday’s results seem uncharacteristic. However economists are still positive that today’s UK statistics are a blip in the economic recovery. Marinov continued: ‘Taken as a whole the UK data still points at quite a resilient, robust recovery. Sentiment indicators-manufacturing PMIs- seem to suggest that the drop we saw in May need not be sustained and could actually be reversed before long.’

Tuesday has revealed the UK Gross Domestic Product Estimate for June sitting at 0.9%, from May’s 0.7% showing a slight increase.

Pound to Rand Rate Forecast - Thursday Sees BoE

The UK will witness a highly significant and data heavy day on Thursday with the BoE not only announcing Interest Rate Decisions but also the Asset Purchase Target, and Trade Balance data.

It is hoped that positive Bank of England statements and favourable data will enable to Pound to remain bullish in the currency market, however, with influential US data released this week as well, the Pound may lose some stability if the US Dollar is set to rally.

Moreover the Rand needs South Africa to witness some stability in its working sectors to enable gains against its major currency peers.

Updated Rand Exchange Rates Today - 10/07/2014

The South African Rand to Australian Dollar exchange rate is trading down -0.13% at 0.09931 ZAR/AUD.
The South African Rand to Canadian Dollar exchange rate is trading down -0.5% at 0.09928 ZAR/CAD.
The South African Rand to Euro exchange rate is trading down -0.42% at 0.06838 ZAR/EUR.
The South African Rand to Pound Sterling exchange rate is trading down -0.44% at 0.05437 ZAR/GBP.
The South African Rand to New Zealand Dollar exchange rate is trading down -0.41% at 0.10573 ZAR/NZD.
The South African Rand to US Dollar exchange rate is trading down -0.69% at 0.09304 ZAR/USD.

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TAGS: Pound Rand Forecasts