GBP ZAR Exchange Rate Rallies from Three-Year Low as Commodities Slide

The GBP ZAR exchange rate reached a new weekly high this morning after depreciating commodity prices prompted the pairing to rally.

<h2>Pound South African Rand (GBP ZAR) Rallies as Commodities Weaken</h2>

The Pound South African Rand (GBP ZAR) exchange rate rebounded from a three-year low yesterday as commodity prices for a number of key exports of South Africa saw a rapid decline.

Prices for gold, the country’s largest export have declined for eight consecutive sessions as of Thursday morning with the precious metal falling in line with other base metals on the London Metal Exchange, where the three month average for prices have fallen over 1%.

Another market that has seen a rapid decline is oil, as ballooning US Stockpiles caused crude prices to plummet over 5% on Wednesday, with further pressure earlier this morning prompting prices to fall below $50 a barrel.

The continued rise in US inventories over recent weeks has led to fears that a supply glut will soon overwhelm production cuts introduced by OPEC at the start of the year and prompt countries to abandon further talks of cuts.

Analysts predict that rising Federal Reserve hike bets and the subsequent strengthening of the US Dollar could prompt commodity prices to fall even further in coming days as investors flee the sector, likely softening the South African Rand even further.

<h2>Pound Sentiment Rises as Chancellor Reveals Spring Budget</h2>

The Pound’s recovery yesterday was also supported by the release of Chancellor Philip Hammond’s Spring Budget despite lacking any major spending announcement.

Markets had hoped that a bumper increase in Tax revenues in January may prompt Hammond to splurge a little this year, however the Chancellor choose instead to focus on the measures he laid out in his Autumn Budget and ensuring that the government has enough money in its coffers to handle the uncertainty of Brexit.

Investors were pleased however by the Office for Budget Responsibility’s (OBR) revised GDP forecast for 2017, with UK growth this year being revised up from 1.4% to 2.0% in light of the economy’s strong performance last year.

Meanwhile a pledge that the government will spend £270m on new and emerging technologies like robotics and biotech is hoped will turn the UK into a market leader and attract more tech firms to invest in Britain.

<h2>GBP ZAR Exchange Rate Forecast: UK Production Data Ahead</h2>

The Pound’s rally may come to an end on Friday following the release of the UK’s latest Production data with the figures across the Manufacturing, Construction and Industrial sectors forecast to decline after a bumper performance at the end of 2016.

Sterling may also be weakened by the release of the UK’s latest Trade Balance, with analysts predicting that the nation’s trade deficit will rise again in January.

Meanwhile a lull in data until next week will likely leave the South African Rand to flounder if commodity prices continue to decline at their current rates.

<h2>Current Interbank Exchange Rates</h2>

At the time of writing the GBP/ZAR exchange rate was trending around 16.63 and the ZAR/GBP exchange rate was trending around 0.06.