Foreign Currency Market Update – GBP / ZAR Update
The GBP/ZAR exchange rate has trended between 22.4781 and 22.8736 over the past seven days.
After a tumultuous period following Jacob Zuma’s shock firing of his finance minister, the GBP/ZAR exchange rate has returned to trending narrowly, with Pound Sterling making small gains overall. Data has been sparse over the Christmas and New Year period, with a thin volume of trades taking place. There has been no domestic data to strengthen or weaken the South African Rand.
GBP/ZAR spiked on Wednesday morning during the London session before losing half its gains, although the exchange rate still closed up on opening levels. The currency was pushed up by a revised GDP forecast for the UK, despite the figure dropping from 2.3% to 2.1%. Although bad news for the UK, the figure showed that the UK was Western Europe’s best performing economy in 2015, increasing trader appetite for the Pound.
Trading was volatile on Christmas Eve and Christmas Day, with the only data coming from the UK. The BBA Loans for House Purchase undershot its forecast, dropping to 44960 from 45463 instead of rising to 46000 as forecast. The marginal drop was not enough to damage Pound Sterling and GBP/ZAR traded up until the end of Christmas Day, when markets closed.
Following Christmas, Pound Sterling has been weakened by news of multiple severe floods in the north of England. Storm Frank is currently battering the UK, with many homes and businesses in Greater Manchester, Cumbria, Lancashire and Yorkshire affected as rivers burst their banks and heavy rain collected in the streets. Prime Minister David Cameron has come under fire for the level of flood defence spending, with many claiming that the south of England has received far more attention and protection than the north.
It has since been estimated that the cost to the UK economy of the flooding in the long-term will total around £6 billion, although with more weather warnings issued and the current spell of bad weather, the chances are that the total will increase.
Pound Sterling dipped sharply yesterday amid claims that it was one of the most overvalued currencies in the world, with analysts predicting that it would lose value over the course of 2016. The slump was short-lived and GBP/ZAR recovered to around opening levels. GBP/ZAR has been on a bullish rise during today’s London session, although the pace of gains is beginning to slow.
GBP/ZAR is currently trading in the region of 22.7800, with Pound Sterling ending the year having gained more than 25% on the South African Rand.
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