Foreign Currency Market Update – GBP / ZAR Update
The past week saw the Pound Sterling to South African Rand (GBP/ZAR) exchange rate rise for the most part, although Sterling actually ended the week lower at close to 20.34.
Last week, the Pound saw its greatest gains against the Rand (with the pairing hitting 20.7821 on Tuesday and 20.7480 on Wednesday) come mainly from the decline of the Rand due to South African mining statistics, along with positive UK Industrial and Manufacturing Production reports.
The Pound began last week trading softly as the UK Composite and Services PMIs both fell short of forecasts. Although it rallied against the Rand on Tuesday, the Pound was hampered by negative Halifax House Price figures for September.
Wednesday was a more positive day for the Pound as the UK Industrial and Manufacturing Production results for August largely exceeded forecasts. The biggest UK news of the week, however, was the Bank of England (BoE) Interest Rate Decision and accompanying minutes. In a now-routine move, the BoE did not raise the rate, but a decidedly cautious attitude contributed to send the Pound plunging soon after the minutes were released.
The damage of the minutes on the GBP/ZAR exchange rate was lessened significantly, however, as South Africa’s Gold, Manufacturing and monthly Mining Production numbers provided cause for concern and reduced demand for the Rand.
No South African economic publications are due this week, therefore all influence in the GBP/ZAR pairing will come either from the UK, the US or as a result of commodity price fluctuations.
This week, Pound Sterling/South African Rand exchange rate movement may occur as a result of the UK CPI results for September and the UK Employment/Earnings figures for August.
Due out tomorrow, the UK’s inflation report is expected to show an annual rate of non-core inflation of 0.0%, unchanged from the previous month. On Wednesday, a 140k person increase has been predicted for the UK Employment Change along with no change of 5.5% for the Unemployment rate. On the same day, UK Average Weekly Earnings, both including and excluding bonuses are forecast to rise, from 2.9% to 3.1% and 2.9% to 3% respectively.
Heads Up
Summary of major upcoming data releases that we think may move the market.