The forward move for GBP ZAR over the past week has been driven by Rand weakness

Pound to South African Rand Exchange Rate Forecast - The forward move for GBP ZAR over the past week has been driven by Rand weaknessThe Pound spiked upwards against the South African Rand.

Foreign Currency Market Update – GBP / ZAR Update

The Pound spiked upwards against the South African Rand last week, taking the GBP ZAR exchange rate all the way up to 12.3714, its highest level since 26th January. However, this 2-month high, which the pair visited on Thursday, was rapidly rejected by the market, and GBP ZAR was trading back below the 12.2000 level again before Friday’s market close. The pair has now tested the 12.3500 – 12.3800 region three times since the last week of January and on each occasion has rapidly re-traced back downwards, suggesting that there is a strong band of resistance in this area.

The forward move for GBP ZAR over the past week has been driven by Rand weakness. The South African currency has struggled, as stock markets traded sideways suggesting that institutional investors are lacking the confidence to commit their funds to asset classes considered to have a higher risk tariff. Chinese data, released during Monday’s Asian session, revealed that domestic industrial profits had contracted in February for the first time in three years, establishing a ‘risk-off’ trading environment which was sustained throughout the week. Wednesday brought the release of weaker than anticipated Durable Goods Orders data in the US, which suggested that American businesses are fighting shy of committing funds to long term capital investments – bad news for the future prospects of both the US and global economic recoveries. Meanwhile, Thursday was a particularly grim day for the Rand; although the South African Reserve Bank opted to maintain its key interest rate at its current level of 5.5%, the statement which accompanied the announcement observed that, “domestic economic growth is expected to remain below potential”, suggesting that the SARB may be forced to tighten its monetary policy later in the year.

The Rand has started this week’s session on a more positive footing, following Sunday night’s encouraging Chinese manufacturing sector data, which triggered healthy gains for global stock indices during yesterday’s session. If the downward move for GBP ZAR picks up momentum through the week, then another run at the pair’s 6-month low of 11.7624, last reached in mid-March, could be on the cards.

Heads Up

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

Related posts:

  1. The Rand is moving forward once again at the start of this week’s session
  2. Pound Sterling to South African Rand Foreign Currency Exchange Rate Forecast – Rand up on Record Gold Prices
  3. The Pound continued to trend weaker against the South African Rand
  4. Pound Sterling to South African Rand Foreign Currency Exchange Rate Forecast – Sterling slips below 11.00
  5. Pound Sterling to South African Rand Foreign Currency Exchange Rate Forecast

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