Pound Sterling South African Rand (GBP/ZAR) Exchange Rate Strengthens after SARB Holds Rates
After the South African Reserve Bank (SARB) opted to leave interest rates on hold at its July policy meeting the Pound Sterling to South African Rand (GBP/ZAR) exchange rate has returned to an uptrend.
While markets had widely anticipated the SARB’s decision to remain on hold this still weighed on the South African Rand (ZAR) ahead of the weekend.
ZAR exchange rates came under further pressure thanks to jitters in the wider global market, with the threat of US trade protectionism continuing to drag on risk appetite.
This helped the GBP/ZAR exchange rate to shrug off the negative impact of a week of underwhelming UK data which had undermined the odds of an imminent Bank of England (BoE) interest rate hike.
BoE Comments Fail to Boost GBP/ZAR Exchange Rate
A speech from Bank of England (BoE) deputy governor Ben Broadbent saw the Pound Sterling to South African Rand (GBP/ZAR) exchange rate reverse some of its recent gains.
As Broadbent indicated that he remains unsure as to whether he will support an August interest rate hike or not the mood towards Pound Sterling (GBP) naturally soured.
With investors still speculating over the likelihood of the BoE raising interest rates next week GBP exchange rates could remain under pressure.
Although the CBI business optimism index for the third quarter saw a modest improvement on Tuesday morning this was not enough to prevent the GBP/ZAR exchange rate extending its slump further.
GBP/ZAR Exchange Rate to Capitalise on UK Parliamentary Recess
With the UK parliament about to go on summer recess the Pound Sterling to South African Rand (GBP/ZAR) exchange rate is likely to see a reduction in politics-related instability over the coming days.
However, even as worries over a potential leadership challenge against Theresa May fade, the issue of Brexit will continue to weigh on the minds of investors.
Unless markets see signs that the two sides are moving closer to a satisfactory final agreement Pound Sterling may struggle to find sustained support.
As business confidence remains under pressure, though, any evidence that the odds of a hard or no deal Brexit are rising could weigh heavily on the GBP/ZAR exchange rate.
Rising SA Prices to Pressure Pound Sterling South African Rand (GBP/ZAR) Exchange Rate
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate could come under pressure on the back of June’s South African producer price index data.
Forecasts point towards a fresh uptick in price pressures on the year; something which could feed through into the wider economy in the months ahead.
Even so, a stronger showing here is unlikely to particularly alter the outlook of the SARB at this juncture.
Confidence in the South African Rand may also weaken further if global trade tensions continue to mount.
An uptick in the second quarter US gross domestic product could offer the Pound Sterling to South African Rand (GBP/ZAR) exchange rate additional support, though.