UK political and economic concerns have seen the Pound Sterling to South African Rand (GBP/ZAR) exchange rate gradually worsen over the past week, with the pairing drifting from 22.9308 to 21.9958.
‘Brexit’ Concerns Dominate Sterling Movement
While the previous week brought a number of impactful UK economic announcements, the ongoing UK referendum negotiations had the most significant impact on the Pound.
Although it finally came to a head on Saturday, the week’s news was nonetheless riddled with investor concerns over whether the PM would or wouldn’t be able to secure the agreement of his fellow EU leaders ahead of the crucial summit.
Despite slipping against the Rand throughout the week, the Pound ended on a relative high due to impressive UK retail sales and borrowing figures for January.
GBP Hits the Rocks after Boris Johnson Weighs In
The Pound has entered freefall against all of its major competitors today due to the news that influential Mayor of London Boris Johnson has joined the ‘Out’ campaign, which is considered a major blow to the PM’s chances.
With the date of the referendum vote now set for June 23rd, the race is on to win over as many voters as possible to each side of the argument, therefore it appears as though Johnson and Cameron will be going head-to-head on more than one occasion before the public finally decides the future of the UK within the EU.
South African Rand Supported Last Week, Turbulence Ahead?
While domestic data was in fairly short supply last week, the South African Rand was nonetheless able to capitalise on the week’s only significant releases, published on Wednesday.
South Africa’s inflation data revealed an increase in consumer price gains on both the month and year. December’s retail sales stats were more mixed, with sales falling on the month, but climbing on the year from 3.8% to 4.1%.
Prior Thursday, and the release of the next South African ecostats, the Rand may slide against the Pound due to high levels of discontent among economists and investors alike over President Jacob Zuma’s dubious financial policies, the effect of droughts on the nation’s food prices and the potential for an imminent national credit rating downgrade.
This Week’s GBP/ZAR Exchange Rate Forecast
For the rest of the week, Pound Sterling/South African Rand exchange rate movement may occur as a result of Wednesday’s UK CBI reported sales for February, Thursday’s UK Q4 GDP figures, the South African PPIs and unemployment rate stats due on the same day and Friday’s UK Gfk consumer confidence survey.
At the time of writing, forecasts were for a fall in reported sales from 16 to 12, a reprint for GDP at 1.9%, a rise for SA’s PPI and fall in its unemployment rate, with a small drop in consumer confidence from 4 points to 3.
Heads Up
Summary of major upcoming data releases that we think may move the market.