Warnings of Damage to UK Steel Industry Keep Pound to Rand Exchange Rate Flat
The Pound to South African Rand exchange rate (GBP/ZAR) has remained close to today’s opening levels following signs that the UK steel industry faces problems.
The source of these concerns has been US President Donald Trump who, in a bid to boost the US economy, has imposed a 25% tariff on steel imports.
The blanket measure has quickly attracted international criticism as steel manufacturers and exporters consider the prospect of a more protective US marketplace.
Among the industry figures expressing concern about the decision has been UK Steel Head of Policy Richard Warren, who stated that:
‘The assumption, from what [Trump] said, is that it would be a blanket tariff of 25% on all steel products.’
‘It’s very big - considering the thin margins that larger steel operators will be operating to, - 25% is a significant tariff.’
‘This would be a unilateral, and extremely blunt, approach to what is a complex global problem of overcapacity in the steel sector.’
Forecast of Trouble over Irish Border Issue Keeps Pound to Rand (GBR/ZAR) Exchange Rate Close
Another factor weighing on the Pound today has been a series of disagreements between UK and EU negotiators regarding the status of the Irish border after Brexit.
The EU position is that in order to avoid customs checkpoints and a ‘hard border’, Northern Ireland should remain within the EU customs union while the rest of the UK leaves it.
The Conservative-led government has rejected the proposal (as have Northern Irish MPs), but the problem still needs to be solved, ideally in the near-term.
European Council President Donald Tusk has stated that the UK negotiating team needs to produce ‘a better idea’ than the EU’s proposal, but such a solution has not yet materialised.
South African Rand to Pound Exchange Rate (ZAR/GBP) Stable after Ramaphosa’s Controversial Land Ownership Statements
While South African economic data has been limited today, the Rand (ZAR) to Pound (GBP) exchange rate has remained steady following remarks from new President Cyril Ramaphosa.
Mr Ramaphosa has begun his presidency by wading into the contentious issue of land ownership in South Africa. Since apartheid ended, the issue of land being owned by either white or black South Africans has been simmering.
In an effort to reassure both sides of the divide, Mr Ramaphosa has stated that while there will be some transferring of lands from white to black ownership, it will not be a ‘smash and grab’.
Pound to South African Rand (GBP/ZAR) Forecast: Will GBP Exchange Rates Rally on Services Stats?
Looking ahead to the coming week, the Pound to Rand exchange rate could break the current deadlock and rise sharply when UK services sector data comes out on Monday.
The UK services sector PMI for February is tipped to show a small amount of growth, which could lead to a GBP/ZAR exchange rate rise.
The next South African news to watch out for will come a day later on Tuesday, when GDP growth rate stats for Q4 2018 will be released.
Year-on-year growth is forecast to rise, and such a result could cancel any negative impacts from a slowing quarterly GDP reading and lead to a Rand to Pound advance.