Foreign Currency Market Update – GBP / ZAR Update
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate was trending slightly lower on Monday in what’s expected to be a relatively quiet week for both UK and South African data releases. With no ecostats from either nation due out on Monday, the GBP/ZAR currency pair is likely to fluctuate on macroeconomic developments. For instance, the South African Rand has been inching toward a one-month high versus the US Dollar (ZAR/USD) on the prospect of a deal being made between Greece and its Eurozone creditors. If the South African currency can break through the psychological level of 12.1350 US Dollar to Rand (USD/ZAR) on Monday then it’s likely that additional gains will be made. Last week saw the South African Rand gain by 3.0% against the US Dollar and any upbeat data releases could help the currency continue advancing.
Tuesday will see the publication of South Africa’s Current Account data, which is forecast to show a widening of the deficit. If economists are correct and the deficit climbs from -198.0B ZAR, to -223.8B ZAR, the US Dollar could recover much of its earlier losses. However, the Rand is likely to be a double edged sword when it comes to the South African current account deficit. The emerging-market currency recently slipped against other majors, most notably hitting a 13-year low against the US Dollar. The fall is hoped to be encouraging exports, but it’s unlikely that the weaker Rand has bolstered exports enough to bring down the current account deficit.
Additionally, Thursday’s Producer Price Index (PPI) will be another major source of movement for the Rand. Although the month of May is only forecast to register 0.3% growth, the annual ecostat is predicted to climb from 3.0% to 3.6%. A favourable data release could offer the emerging-market currency some stability. Meanwhile, if Greece does make a deal with creditors, the South African Rand could be offered some substantial support. Negotiations have progressed at an extremely slow pace in the past few months but it appears that a deal may be on the cards. Greece’s creditors have offered a six-month bailout extension as the current package expires at the end of June.
Looking slightly further ahead, South African Private Sector Credit and Balance of Trade ecostats (out on Tuesday June 30th) may see the Rand fluctuate. Meanwhile, Wednesday July 1st is scheduled to see the release of the KAGISO Manufacturing Purchasing Managers Index (PMI) as well as Total New Vehicle Sales figures, ahead of Thursday’s South African Consumer Confidence data.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate is trending at 19.2270. The US Dollar to South African Rand (USD/ZAR) exchange rate is trading in the region of 12.1363, just above the psychological support level of 12.1350.
Heads Up
Summary of major upcoming data releases that we think may move the market.