The Rand had come under heavy selling pressure towards the end of last week.
Foreign Currency Market Update – GBP / ZAR Update
The GBP ZAR exchange rate suffered three consecutive sessions of losses in the first three days of this week, which saw the pair settle back below the 13.0000 level for the first protracted period since the second week of May. The downward move for GBP ZAR was triggered by a strengthening of the risk-sensitive Rand thanks to improved global investor sentiment. The pick-up in the mood of market participants in the first half of the week was attributable to increased confidence regarding the eurozone’s ongoing debt crisis; German Chancellor Angela Merkel’s calls over the weekend for a deeper, more wide-ranging political and fiscal union in the eurozone played well with investors, as did European Central Bank President Mario Draghi’s comments in the middle part of the week, which hinted that the ECB was considering lowering interest rates and making credit more easily available in an attempt to avert an all-out debt meltdown in the region.
The Rand had come under heavy selling pressure towards the end of last week, as investors shied away from assets considered to be a ‘risky bet’, due to increased concerns over the escalating interest rates which Spain was paying on it bonds. This pushed the GBP ZAR exchange rate all the way up to 13.3141, its highest level since 16th May, during last Friday’s session. However, the pair’s failure to break to a new multi-year high above 13.3942 at this time may prove significant. It is too early to assert that the subsequent move lower which has followed marks the start of a new downtrend – consecutive closes below the previous low at 12.4021 would be required for this. Indeed, with South African policy-makers calling for a weaker Rand in order to boost domestic industry and with Gill Marcus, the Governor of the South African Reserve Bank, openly admitting earlier this week that the SARB is actively intervening in the currency markets, further downside for the Rand can not be ruled out in the near-term.
Summary of major upcoming data releases that we think may move the market.
- Pound Sterling to South African Rand Foreign Currency Exchange Rate Forecast – Rand up on Record Gold Prices
- The South African Rand began last week’s session in go-ahead mood
- South African Rand Foreign Currency Exchange Rate Forecast – Sterling in freefall against strong Rand…
- Sterling spent the early part of last week firmly in the ascendency against the South African Rand
- Pound Sterling to South African Rand Foreign Currency Exchange Rate Forecast