Pound to Rand: GBP/ZAR Exchange Rate Declines as UK Inflation Softens in April

May 19, 2015 - Written by Admin

STORY LINK Pound to Rand: GBP/ZAR Exchange Rate Declines as UK Inflation Softens in April

Pound Sterling to Rand (GBP/ZAR) Exchange Rate Down on UK Inflation Data

After disappointing UK data shook the market, the Pound slipped against other majors including the Rand. However, with influential South African domestic data due out over the rest of the week, the Pound may be able to recover some of its losses. The UK currency took a tumble when British non-core inflation dipped below the 0.0% March recording, to -0.1% in April. The ecostat came as a surprise to economists who had expected a month of stagnation. Additionally, the core gauge also recorded a slip from 1.0% to 0.8%.

Industry expert Ben Southwood notes: ‘We have deflation – albeit extremely mild deflation of 0.1% - for the first time since the 1960s. But this seems to be “good deflation”, coming mainly from cheaper goods – especially from cheaper oil – rather than from a drop in consumer demand. Economists worry about deflation, but only the “bad” kind, when prices are sliding at the same time as wages and output. Bad deflation makes debts harder to bear, puts people out of jobs, and can lead to a downward spiral. Good deflation, when wages and output are rising steadily, makes everyone better off.’

Latest Rand Conversion Rates Today:

The South African Rand to Australian Dollar exchange rate is +0.77 pct higher with a conversion rate of 1 ZAR equals 0.10609 AUD.
The South African Rand to Canadian Dollar exchange rate converts +0.48 per cent higher at 1 ZAR is 0.10270 CAD.
The South African Rand to Euro exchange rate today is converting +1.37 per cent higher at 0.07533 ZAR/EUR.
The South African Rand to Pound Sterling exchange rate today is converting +0.74 per cent higher at 0.05413 ZAR/GBP.
The South African Rand to New Zealand Dollar exchange rate today is converting +0.23 per cent higher at 0.11437 ZAR/NZD.
The South African Rand to US Dollar exchange rate today is converting -0.2 per cent lower at 0.08398 ZAR/USD.

South African Inflation Data Due for Release

The tables could soon turn for the Rand exchange rate with Wednesday bringing South Africa’s own inflation figures to the market. It’s expected that core inflation will slip from 5.7% to 5.2% in April on the year. Meanwhile, the non-core measure is pegged to increase from 4.0% to 4.5%. Wednesday will prove to be an extremely interesting day for the Rand with South African Retail Sales numbers also due out for release. The Rand could fall significantly if the annual Retail Sales figure declines from 4.2% to 1.4% as economists are presently predicting. The ecostats could be highly influential ahead of the South African Reserve Bank announces its borrowing cost decision this week.

Reuters report: ‘Economists polled by Reuters said the Reserve Bank would not raise interest rate until at least November, as it waits for inflation to reach its comfort level. A weaker Rand remained a worry for some economists, the poll also found, however inflation remains under the central bank’s upper limit of 6%.’

BoE Minutes Ahead, Pound Movement Expected

The UK will also release its fair share of influential stats this week with Wednesday seeing the publication of the Bank of England’s May meeting minutes. Despite the central bank standing pat on interest rates in May, any difference of opinion amongst policymakers could offer the Pound a significant chance to rally.

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