June 26, 2018 - Written by John Cameron
STORY LINK Pound South African Rand (GBP/ZAR) Exchange Rate Steadies as BoE Haskel Proves Dovish
Soon-to-be Policymaker Johnathan Haskel Talks down Pound (GBP) Exchange Rates
The Pound South African Rand (GBP/ZAR) exchange rate steadied on Tuesday, limited by some dubiously dovish comments from soon-to-be policymaker Johnathan Haskel.
Mr Haskel – set to replace known hawk Ian McCafferty on the 1st of September - warned against raising interest rates too quickly, pointing to the perceived dangers of escalating trade tensions and Brexit-related uncertainty,
‘Given current conditions and current economic data, I agree with the broad direction of travel” for interest rates’, he stated, continuing; “[The] first risk involved in raising interest rates would be if this is done too quickly, disturbing investment and borrowing plans by more than would have been expected.”
This outlook hurt the Pound, with investors concerned that the Bank of England (BoE) could be swapping a hawk for a dove.
South African Rand (ZAR) Exchange Rates Encumbered by Global Trade Tensions
The South African Rand (ZAR) encountered familiar pressures on Tuesday, with investor anxieties regarding the ongoing trade spat between the United States and China weighing on demand.
Asian stocks struggled throughout the day, with a weaker Chinese Yuan (CNY) and diminishing market risk appetite keeping the Rand and other commodity-based currencies in the doldrums.
Looking back, the Rand’s overvaluation had effectively been eliminated by its 13% slump this quarter - with the sell-off putting the currency back to its historical average.
Whether the currency will fall below this average, however, remains to be seen, with South Africa’s PPI readings (due on Thursday) and the balance of trade result (due on Friday) liable to knock ZAR up or down.
Pound South African Rand (GBP/ZAR) Exchange Rate Forecast: EU Council Summit in the Spotlight
The outlook for the Pound South African Rand (GBP/ZAR) might currently be positive, but investor anxieties are nevertheless simmering away regarding Thursday’s European Council meeting and the Brexit headlines that will likely ensue.
Investors are hopeful that the summit will include an agreement on the Brexit withdrawal bill or, at the very least, provide a better degree of clarity regarding the UK’s future outside of the EU.
Economists will be keeping a careful watch on anything relating to the ongoing deadlock of the Irish border in particular, with any sign of progression liable to push GBP/ZAR higher, and ongoing stagnation liable to give the Rand room to breathe.
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TAGS: South African Rand Forecasts