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South African Rand (ZAR) vs pound sterling (GBP): Outlook and forecasts for short and medium term

By Gary Howes

south african rand pound sterling forecast

We consider the prospects of the British pound sterling to South African Rand exchange rate and note the GBP has the upper hand.

The British pound sterling to South African rand exchange rate (GBP/ZAR) is currently quoted as being 0.53 pct higher on a day-to-day basis at 17.8358.  

(Note: Our GBP/ZAR quotes are from the spot markets. Your bank will charge a spread on the rate at their discretion. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering you up to 5% more currency. Please learn more here.)

The British pound is currently the main driver in this pairing following on from a non-event Bank of England MPC decision delivered at 12PM today.

Some analysts had been expecting the MPC to announce changes to the forward guidance policy - however this was not to be the case and GBP was bid higher against the Rand as a result.

Indeed, the GBP's strength is widespread and as Citigroup acknowledge the currency is likely to be one of the outperformers in 2014.

Forecast for the pound vs South African Rand (ZAR)

A look at the short-term charts (2 to 6 weeks) confirms the British pound is on an upward trend - we note 4 bullish events outweighing 2 bearish events.

The rate is well above the instrument's 21 day moving average indicating the strength of the move.

exchange rate rand

Caution must be observed on the Relative Strength Index (RSI) however - this is an indicator used to gauge whether an instrument is overbought or oversold. It would appear the GBP/ZAR is in danger of being overbought, thus a correction lower is possible.

The longer-term picture (more than 9 months) favours GBP to move yet higher  with no resistance levels being cited which could afford the Rand a break.

There are two bullish signals and no bearish signals in this timeframe.

For those looking to trade the Rand by going long a stop loss should be considered at 16.8881, for those looking to short the stock a stop-loss at 18.1435 should be considered.

Fundamental picture for ZAR

The South African Rand recovered some ground overnight but could slip back to a five-year low against the US Dollar if today’s manufacturing data comes in below expectations.

The Rand is not expected to make much of a recovery as the US continues to post positive data which increases the likelihood of the Federal Reserve tapering its easing programme at a faster pace.

A move that would have a negative impact on emerging and commodity based currencies such as the Rand.

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