Above (C) Pound Sterling Live 2015.

The Rand exchange rate complex was boosted in early February as global oil prices formed a bottom to recent declines.

The recent recovery in oil prices has helped pick up other commodities which has in turn propped up the commodity currency complex.

Names like the Canadian and New Zealand dollars joined the Rand in rallying as their key exports recovered in value.

John Cairns at RMB comments on the recent return to form for the ZAR:

“Improving global sentiment on a rising oil price and progress in Greek talks have hit the dollar and bonds and helped equities and the rand.

“USD/ZAR managed to test the 11.36 level late yesterday but has lost momentum and is at risk from deteriorating news on Greece. EUR/ZAR managed to dip below 13.00 but seems happier back at 13.05. Rand outperformance has been closed somewhat as other risk-currencies have caught up with the rand gains.”

GBP Rallies, Sticks to Sideways Range

At the time of writing though the oil based premium afforded to the ZAR appears to have dried up.

Indeed, brent crude has actually fallen in the mid-week session creating a bearish cloud around the commodity currencies.

The Pound to Rand exchange rate (GBP/ZAR) is currently trading at 17.4000 back above the longer-term support at 17.1170.

We see the bounce of support as being heavily technical in nature - this point has arrested declines twice in the past three months and reinforces a sideways trajectory in place since April.

We see little suggestion that a significant decline in GBP/ZAR can take place unless the economic data flow deteriorates significantly.

The other unknown concerning the outlook remains the future direction in oil prices - is the recent recovery a blip or the start of a more robust climb in which case the South African Rand could have further to climb.

Rand Exchange Rates Higher in January

Sterling has done well to defend recent lows in the current environment explains Cairns:

“The rand is going through another bout of outperformance, strengthening yesterday even as other risk-currencies stayed flat or weakened.

“The previous two bouts of outperformance this year did not last and the betting should be that this one won’t either, but we must say that demand for the rand remains extremely resilient.”

Meanwhile, the global shift to easier monetary policy continues.

The Reserve Bank of Australia became the latest central bank to ease, cutting rates by 25bp to a new all-time low of 2.25% this morning — to the detriment of the Aussie dollar.

“The rand has certainly gained from the SARB not joining the doves but, interestingly, it is even outperforming the Brazilian real, which has been assisted by rate hikes,” says Cairns.