Pound to South African Rand Exchange Rate Forecast – The Rand is moving forward once again at the start of this week’s session

Pound to South African Rand Exchange Rate Forecast - The Rand is moving forward once again at the start of this week's sessionIf the Rand maintains its current forward momentum and global share markets trade into positive territory, then another run at last week’s key interim floor of 11.7624 looks possible for the GBP ZAR rate during this week’s session.

Foreign Currency Market Update – GBP / ZAR Update

The Rand began last week’s session in the currency markets on the front foot, following strong US employment data at the end of the week before, which increased institutional investors’ appetite for riskier asset classes. This saw the GBP ZAR exchange rate drop to its lowest level for six months, to touch 11.7624 on Tuesday.

However, support for the South African currency eased as the week progressed, as market participants factored-in the news that four major US retail banks, including the giant Citigroup, had failed the Federal Reserve’s latest stress test. The fight to safety continued when Ben Bernanke, the Chairman of the Federal Reserve in the US, suggested in his post-FOMC press conference, that a third round of US Quantitative Easing was unlikely in the near-term. The shift out of risk saw GBP ZAR strongly reject Tuesday’s low to climb to 12.1230 during last Wednesday’s session.

The Rand is moving forward once again at the start of this week’s session, following the release of the South African Reserve Bank’s Quarterly Bulletin yesterday. The report revealed that South Africa’s economy expanded by 5.1% in the final quarter of 2011, outstripping analysts’ expectations. The SARB’s Chief Economist, Monde Mnyande, added to the positive mood surrounding the Rand, when he stated in comments following the report’s release, that South Africa’s economy was in a stronger state than three months ago.

If the Rand maintains its current forward momentum and global share markets trade into positive territory, then another run at last week’s key interim floor of 11.7624 looks possible for the GBP ZAR rate during this week’s session. If tomorrow morning’s Bank of England minutes suggest that further Quantitative Easing is on the cards for the UK economy later this year, then the pair is likely to come under further selling pressure. Alternatively, a wobble in equities markets could trigger a run at the near-term high of 12.3676, which the pair last visited in mid-February.

Heads Up

Summary of major upcoming data releases that we think may move the market.

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