GBP ZAR Rate Continues On Its Downward Trajectory


Pound Sterling to South African Rand Foreign Currency Exchange Rate Forecast - GBP ZAR Rate Continues On Its Downward TrajectoryThe GBP ZAR exchange rate has traded below the 12.0000 level, save for a few very brief incursions, since Friday afternoon’s encouraging US labour market data.

Foreign Currency Market Update – GBP / ZAR Update

The GBP ZAR exchange rate has continued on its downward trajectory over the past seven days, causing the pair to trade as low as 11.8875 just before global currency markets closed on Friday night. This was the lowest level that the pair has traded to since 19th September. 2011. Last November’s high of 13.3578 now seems a distant memory – July 2011’s low of 10.6405 would appear a more likely target if the pair continues trending downwards.

Last Week

Last week was a relatively quiet one for UK data releases, with three separate PMI surveys delivering mixed results; the Manufacturing and Services sector numbers convincingly beat expectations, printing at 52.1 and 56.0 respectively, while the PMI Construction survey disappointed, registering at a lowly 51.4. Elsewhere, there were worrying signs for Britain’s housing sector, with December’s Mortgage Approval data and January’s Nationwide house price survey both coming out lower than expected. Meanwhile, the Rand’s relative strength on the week was determined by data releases outside South Africa, as is often the case. Friday’s key US Non-Farm Payroll numbers showed that 243,000 new jobs had been generated in the States last month. This figure far exceeded expectations, seeing global share markets register healthy gains, as appetite for risk surged. This benefitted the high-yielding, risk-sensitive Rand more than almost any other of the sixteen most-actively traded currencies.

Heads Up

*Denotes the importance of the data item *** being the highest level.

** Thursday morning sees the release of the latest UK Industrial and Manufacturing Production figures. Industrial Production figures are expected to show an annualised contraction of 3.1%, while analysts expect the Manufacturing Production data to show a return to growth for the sector, following November’s negative figure.

** Thursday morning also sees the release of December’s UK Visible Trade Balance numbers. A deficit of some £8.6bn is expected.

*** The key UK data release this week comes at lunchtime Thursday, when the Bank of England Monetary Policy Committee announces its interest rate/asset purchase scheme decision. An upping of the current £275bn allocated by the Bank to its QE programme would be likely to damage the Pound.

** The closely-watched NIESR GDP Estimate for the UK is released on Thursday afternoon. If the monthly figure for January beats December’s counterpart number of 0.1%, then Sterling will be supported.


The GBP ZAR exchange rate has traded below the 12.0000 level, save for a few very brief incursions, since Friday afternoon’s encouraging US labour market data. The longer the pair trades below 12.0000, the more difficult it will become for it to break back above this level. There appears little reason for GBP ZAR’s current downtrend, which has taken us from above 13.3000 as recently as the last week of November, all the way down to 11.8875 on Friday, to cease. A continuation of the current trend would see December 2010’s multi-year low of 10.1931 hove into view as a medium-term target. Conversely, a shift out of risk by global investors, perhaps elicited by a continued failure by Greece’s policy makers to pass the stringent budgetary measures demanded by the EU/IMF/ECB in order for the debt-addled state to qualify for a second bail-out, could see GBP ZAR settle back above 12.0000 once more.

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