BoE Ramsden Surprises Markets with Hawkish Remarks – GBP/ZAR Exchange Rates Soar
The Pound South African Rand (GBP/ZAR) exchange rate soared over 1% on Monday, climbing as markets reacted to unexpectedly hawkish comments from BoE Deputy Governor Dave Ramsden.
Mr Ramsden is known to be one of the more dovish rate-setters, but his latest comments revealed that he believes accelerating wage growth in the UK to be valid justification for an earlier-than-expected rate hike.
Speaking in an interview Ramsden stated:
‘…relative to where I was, I see the case for rates rising somewhat sooner rather than somewhat later’.
This is only the latest in a whole host of clues that members of the central bank’s Monetary Policy Committee (MPC) have been leaving, with the bank’s chief economist Andy Haldane also proving hawkish recently, stating that he thinks there is ‘…the potential for greater than expected momentum in both global and UK growth and inflation’.
Mr Haldane continued:
‘In my view, this would put the balance of risks to the path of interest rates necessary to return inflation sustainably to target to the upside’.
Beyond this! The financial services company UBS outright predicted a rate hike for May almost a month ago, citing the ever buoyant UK inflation levels and renewed acceleration in wage growth as primary factors.
In this respect, the near-term outlook for GBP/ZAR remains quite firmly in Sterling’s favour, though flexibility does remain on the Brexit negotiation front, with a lack of demonstrable progress still liable to scupper Pound bulls optimism.
SA President Ramaphosa Prepares to Appoint Deputy President – What can we expect for ZAR Exchange Rates?
The South African Rand (ZAR) could see some volatility this week as markets react to who President Cyril Ramaphosa chooses to appoint at the country’s Deputy President.
A week has passed since Mr Ramaphosa was sworn in as the new head of state, but the President has not yet decided who will be his second in command.
There have been a variety of names speculated, such as Human Settlement Minister Lindiwe Sisulu and ANC Deputy President David Mabuza, being notable choices, but any selection will likely come with a degree of uncertainty and volatility.
Beyond this, Ramaphosa’s cabinet reshuffle could have wider implications on policy as a whole, with investors slightly anxious about what to expect from new members and the effects that it could have on the South African economy.
GBP/ZAR Exchange Rate Outlook: Markets Prepare for UK PM Theresa May’s Brexit Speech
Beyond the South African cabinet reshuffle, the largest drivers this week for the Pound South African Rand (GBP/ZAR) exchange rate will likely be Brexit negotiation-oriented, with UK Prime Minister Theresa May set to give a speech detailing progress (if any) that has been made on the Brexit transition front.
If the speech provides clarity for businesses then Sterling could find additional support, if the speech reveals that impasses between Downing Street and Brussels remain, however, then markets will remain anxious, especially with March initially being cited as the month in which talks will progress onto trade.
On the data front, Wednesday’s SA balance of trade reading for January could also be pertinent, but the reading will likely play second-fiddle to Mr Ramaphosa’s cabinet reshuffle.
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