Pound to Rand Exchange Rate (GBP/ZAR) Maintains Higher Trend After Carney Speaks in Liverpool

September 9, 2014 - Written by David Woodsmith

STORY LINK Pound to Rand Exchange Rate (GBP/ZAR) Maintains Higher Trend After Carney Speaks in Liverpool

The UK Pound to Rand exchange rate (GBP/ZAR) is continuing to trade in a stronger position on Thursday morning, after positive UK data earlier in the week drove Sterling higher.

The Pound was supported by Governor of the Bank of England Mark Carney, who stated his views on UK interest rate hikes and wages. Meanwhile the Rand was affected by a widening of South Africa’s Current Account gap.

A quick recap on the latest conversion rates today:

- The Rand to Australian Dollar exchange rate is trading down -0.12% at 0.09956 ZAR/AUD.
- The Rand to Canadian Dollar exchange rate is trading down -0.92% at 0.10062 ZAR/CAD.
- The Rand to Euro exchange rate is trading down -1.27% at 0.07082 ZAR/EUR.
- The Rand to Pound exchange rate is trading down -0.97% at 0.05690 ZAR/GBP.
- The Rand to New Zealand Dollar exchange rate is trading down -0.63% at 0.11111 ZAR/NZD.
- The Rand to Singapore Dollar conversion rate is trading down -0.62% at 0.11568 ZAR/SGD.
- The Rand to Dollar conversion rate is trading down -0.9% at 0.09163 ZAR/USD.

South African Exports Fall after Strike Action, ZAR Exchange Rate Softer

South African exports have flopped in recent months as a result of strike action which has plagued the domestic economy for the majority of 2014. As a result, the nation’s Current Account Gap was forecast to widen in the second quarter to -161.8B Rand, slightly more than the previous quarter’s -161B. The actual figure showed a larger than expected increase at -222.0B Rand, equivalent to 6.2% of Gross Domestic Product. The South African Reserve Bank commented on today’s statistics: ‘Structural impediments coupled with prolonged industrial action, a moderation in global demand and declining commodity prices severely dented South Africa’s export performance in the second quarter.’

Conversely South Africa’s Business Confidence figure has exceeded forecasts coming in at 46.0 index points in quarter three. Economists had forecast a drop in the third quarter to 36.29, down from the second quarters 41.0. Tuesday’s figure has highlighted the growing business sentiment in South Africa, and showed growth in the majority of business sectors. Rand Merchant Bank economist Ettienne le Roux commented: ‘The third quarter increase in the RMB/BER BCI [Business Confidence Index] points to a further improvement in economic growth where the second half of the year should be better than the first.’

Conversely the Pound has come under pressure of late as the debate over the outcome of the Scottish Referendum heats up. The latest YouGov poll—published on Sunday—revealed that a winning 51% of voters are currently in favour of Scotland leaving the UK. Sterling has dipped to a ten-month low versus the US Dollar (USD) as the threat of Scotland leaving the UK looms.

Forex expert Kathleen Brookes commented: ‘The markets took for granted for so long that it was going to be a “No” vote and as the polls narrow there has been a huge change in sentiment. If there is a “Yes” vote... things are going to get very ugly in the markets, not just for the Pound, but for stocks and potentially raise out borrowing costs in the UK without Scotland.’

Governor of the Bank of England Discusses UK Interest Rate Hikes

Tuesday however has seen Governor for the Bank of England Mark Carney make a speech in Liverpool, in which he discussed wage issues within the UK economy. Carney has stated he believes that the UK’s economic recovery since the Great Recession ‘has momentum’ and has ‘exceeded all expectations.’

Furthermore Carney has offered some clarity on the topic of interest rate hikes in the UK which have been eagerly anticipated by many. The Pound could gain support following Carneys statement which was as follows: ‘Our latest forecasts show that, if interest rates were to follow the path expected by markets—that is, beginning to increase by the Spring and thereafter rising very gradually—inflation would settle.’

For now the Pound is likely to remain bullish against the South African Rand after the Bank of England has delivered a fairly optimistic assessment of the UK economy which could support the currency. The Rand however, will need the support of favourable domestic data if it is to recover ground against its currency peers.

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TAGS: Pound Rand Forecasts Pound Sterling Forecasts South African Rand Forecasts