Pound South African Rand Exchange Rate Fluctuates in Early Trade
The Pound South African Rand (GBP/ZAR) exchange rate is trading in a wide range this morning amid a mixed market mood.
At the time of writing the Pound South African Rand exchange rate is trading at around ZAR23.1562. Down roughly 0.2% from this morning’s opening rate.
South African Rand (ZAR) Pressured by Geopolitical Uncertainty
The South African Rand (ZAR) fell sharply in overnight trade as flaring tensions in the Middle East saw skittish investors shun the emerging market currency in favour of safe-haven assets like the US Dollar (USD).
This follows the news that Israel conducted a ‘targeted raid’ overnight in Gaza. Which involved several tanks crossing into the north of the Gaza strip.
In a statement, Israel’s army suggested the raid is part of ‘preparations for the next stages of combat’, which is expected to be a wider ground invasion.
In a post, on social media the Israel Defence Force (IDF), said:
‘IDF tanks and infantry struck numerous terrorist cells, infrastructure and anti-tank missile launch posts. The soldiers have since exited the area and returned to Israeli territory.’
The news alarmed markets, driving the Rand lower amid fears this could mark a major escalation of tensions in the region.
However, a subsequent pullback in the US Dollar this morning, linked to a sharp rebound in the Japanese Yen (JPY) amid signs of a potential intervention from Japanese authorities, has helped the Rand to bounce back from its overnight lows.
Pound (GBP) Undermined by UK Economic Concerns
At the same time Pound (GBP) is struggling to attract support this morning amid ongoing concerns over the state of the UK economy.
Recent economic releases have broadly downbeat. With most pointing to a slowing economy at risk of slipping into a recession.
Tuesday’s PMIs were the latest releases to disappoint as they signalled the UK’s private sector remained on the back foot at the start of the fourth quarter.
The lacklustre data is also weighing on Bank of England (BoE) interest rate expectations. Analysts now overwhelming forecast the BoE will leave interest rates on hold again when it meets again next week.
Pound South African Rand Exchange Rate Forecast: Uptick in PPI to Lift ZAR?
Still to come today is the publication of South Africa’s latest producer price index. Which could inject some volatility into the Pound South African Rand (GBP/ZAR) exchange rate later this morning.
Economists forecast that September’s PPI figures will report that the recent rebound in producer inflation continued into its second month.
This is likely to stoke inflation expectations, which in turn it may bolster South African Reserve Bank (SARB) interest rate hike bets and lift the Rand.
Meanwhile the Pound could be pressured with the publication of the Confederation of British Industry’s (CBI) latest distributive trades index, if October’s figures report the UK’s retail sector remains in the doldrums.