On a day devoid of influential data for either the UK or South Africa, the Pound has managed to rack up a notable gain against the South African Rand. This follows last week’s GBP/ZAR rebound from 21.3002 to 22.0970.
Pound Influenced by Domestic Policy
At the start of a new week of trading the Pound’s movement has generally been positive overall, although UK developments have been limited.
Recent news from the UK has focused on a scheme to boost the income of low-paid workers by incentivising them to put money into savings accounts. While this sounds positive on paper, it is predicted that due to the currently unsupportive levels of interest, very few will actually take the government up on its latest offer.
Elsewhere, a report has revealed that the wealth disparity between the richest and poorest in the UK has increased considerably, with the top 1% receiving £1tn against the lowest income households receiving £280bn.
South African Rand Destabilised by Poor Metal Prices and Political Turmoil
The appeal of the South African Rand declined at the start of the week as the price of the gold and platinum dipped and political infighting among South African governmental departments hit headlines.
Current Finance Minister Pravin Gordhan is apparently under investigation from the ‘Hawks’ criminal investigation force, which has been challenged by Gordhan for having ‘no interest’ the economic health of the country. Gordhan remains at loggerheads with President Jacob Zuma amid the swirling corruption allegations blighting the everyday actions of the South African parliament.
GBP/ZAR Exchange Rate Forecast
Over the current week, Pound Sterling/South African Rand exchange rate movement may occur as a result of Wednesday’s spate of UK and South African domestic data releases, as well as Thursday’s interest rate decisions from both nations.
On the UK side of things, the Pound-centric data out on Wednesday will cover jobless claims in February, as well as earnings and unemployment in January. At the time of writing, forecasts were for a reduction in the number of claims, a slight rise in earnings over the period and a rise in the number of employed persons, which would nonetheless see the unemployment rate remain at 5.1%.
Most notably on Wednesday will be the Budget delivery by Chancellor George Osborne; current forecasts are bleak, with cuts and tax adjustments expected to make up the brunt of the Chancellor’s economic plans.
South Africa’s contribution on Wednesday will be the national retail sales results for January, which were forecast to print positively on the month and the year at the time of writing.
Thursday will bring a pair of central bank interest rate decisions, with the Bank of England (BoE) and South African Reserve Bank (SARB) both announcing their (expected) interest rate freezes at 0.50% and 6.75% respectively.
Heads Up
Summary of major upcoming data releases that we think may move the market.