Pound Continues to Recover Versus South African Rand; Rates Now at 19.1500
The pound to South African (SA) Rand traded higher, reaching the 19.20s on Thursday after the BOE decided the economy was sufficiently strong not to require more stimulus
The pound to rand pair unexpectedly rose on Thursday after the Bank of England (BOE) surprised markets by not cutting interest rates or increasing QE.
Sterling rose in most pairs as a result of the move, and GBP/ZAR fought higher, reaching the 19.20s.
The question now for the pair is whether it will push higher or capitualte again in line with the dominant down-trend.
One impact of the decision was a general rise in global risk appetite which helped the rand, as well as other emerging market currencies, and this led to a little bit of a correction back down for GBP/ZAR.
Wider BOE Influence on Global C-Bank's
The BOE's monetary policy stance is important because of the way in which it impacts on other central banks and their likely policy stances, according to Rand Merchant Bank's (RMB) John Cairn's who says that:
"We are not so concerned about what the BoE does itself but rather what signal the BoE sends about what the big boys — the ECB, BoJ and, in a separate way, the Fed — are going to do."
The fact the BOE has done nothing will slow down the pace of monetary easing in other country's.
"Note furthermore that today’s BoE decision is likely just to be a precursor to possibly much more aggressive easing to be implemented when they release their inflation report in early August."
Cairn's also notes how the post-Brexit recovery rally seems to have run its course, and this could weigh on the outlook for the rand as emerging market currencies are correlating strongly to risk.
Latest Pound / SA Rand Exchange Rates
  | Live: 22.6363▼ -0.07%12 Month Best:25.4721 |
*Your Bank's Retail Rate
| 21.8667 - 21.9572 |
**Independent Specialist | 22.3194 - 22.41 Find out why this is a better rate |
* Bank rates according to latest IMTI data.
** RationalFX dealing desk quotation.
Chart Insight
The pound to rand is on the rise again, currently trading at 1.191500.
The overall chart view is still bearish, however, as the pair is in the midst of a strong move lower, and although it has recovered over recent days it is still not sufficient to call a reversal yet.
The pair has just completed the second part, or ‘pole’ - of a bearish flag pattern.
As far as a forecast goes: a break below the 18.6596 lows would probably lead to a continuation down to an initial target at 18.0000.
