GBP ZAR has slumped -0.7% to 18.84, despite market relief that the latest inflation data didn’t show another creep higher for consumer prices.
Cabinet Rocked by Scandal but Pound Sterling South African Rand Exchange Rate Losses Contained
Weakness seen in the Pound elsewhere has not been present in the GBP ZAR exchange rate over the past few days.
Political scandals weighed on the Pound midweek, but it managed to continue recording gains against the South African Rand.
Secretary for International Development Priti Patel resigned in response to growing anger within Westminster that she had met with Israeli officials whilst on holiday in the country, without informing Downing Street or having any other British officials present.
However, it was the Rand that remained the weakest currency and the GBP ZAR exchange rate rose even further on Friday after a bumper slew of trade and industry data from the UK largely beat expectations.
GBP ZAR Exchange Rate Supported by South African Mining Production Slump
Poor mining data weighed on the South African Rand last week, after showing a huge contraction in output.
Mining production slumped -7% on the month in September - over three times the forecast decline - and fell -0.9% year-on-year instead of slowing from 7.9% to 6.5% as economists expected.
Gold production slowed from 7.8% to 2.3%, while manufacturing production declined -0.8% on the month and -1.6% on the year against forecasts of a slowdown in growth to 0.2% and 0.6% respectively.
Political Chaos Weighs on Pound (GBP), but South African Rand (ZAR) Unable to Capitalise
While the Pound has tumbled elsewhere on the current political chaos engulfing the government, the Pound South African Rand exchange rate has managed to hold on just below opening levels.
Theresa May’s ability to lead the government is being questioned once again after it emerged that nearly enough Tory MPs supported a vote of no-confidence in her to trigger a full leadership challenge.
Meanwhile, Brexit secretary David Davis has caved in to demands from rebel MPs to allow a vote on the final Brexit deal, in an attempt to prevent the withdrawal bill being blocked in the House of Commons this week.
However, the vote cannot prevent the UK government withdrawing from the EU without a trade deal and Davies has given no guarantee that the vote will happen before the UK has actually left.
GBP ZAR Exchange Rate Forecast to Fluctuate as Data Influences UK Service Sector Outlook
Tomorrow’s wage growth figures, jobless claims and unemployment rate will give further information regarding the health of the UK’s key services sector.
Real wages – pay growth when the rate of inflation is taken into account – are likely to have fallen again in the three months to September.
On Thursday, retail sales data could further support or undermine worries over the health of the UK’s key services sector. Speeches in the afternoon from Bank of England officials Carney, Broadbent, Cunliffe, Place, Ramsden and Woods promise to keep Sterling volatile.
The only economic data for South Africa due over the next seven days is tomorrow’s retail sales figures for September.
Forecasts are gloomy, with economists expecting to see a -1.2% slump on the month and a slowdown in annualised growth from 5.5% to 4.2%.
This would further raise concerns that the South African economy is heading towards contraction and could therefore prevent the Rand from capitalising on any weakness in the Pound.
Data Affecting This Week’s GBP/ZAR Exchange Rate Forecast
15th November 09:30 GBP Average Weekly Earnings (3M/YoY) (SEP)
15th November 12.00 ZAR Retail Sales (MoM) (SEP)
15th November 12.00 ZAR Retail Sales (YoY) (SEP)
16th November 09.30 GBP Retail Sales Ex Auto Fuel (YoY) (OCT)
16th November 14.00 GBP BOE’s Carney, Broadbent, Cunliffe, Place, Ramsden, Woods Speak
20th November GBP CBI Trends Total Orders (NOV)
21st November 09:30 GBP Public Sector Net Borrowing (OCT)