The Pound recorded a notable loss against the South African Rand during Tuesday’s trading session, extending the broad-based GBP slump recorded on Bank Holiday Monday.
UK data due this week includes consumer confidence and Manufacturing/Construction PMI results for August.
The Rand has been largely stable so far this week, with major rivals like the Pound, Euro and US Dollar all falling against it.
In spite of this positive performance, however, South Africa’s economic situation remains uncertain, with political pressures and low growth threatening to send the Rand plummeting in the near future.
Over the week so far, the Pound has recorded a low of 18.75 and a high of 18.99 against the Rand.
Pound Unsettled by Hints of Damaging ‘Brexit’ Talks from German Official
The Pound fluctuated against its rivals on Tuesday, having been harmed by recent comments from Sigmar Gabriel, Germany’s Vice Chancellor.
Speaking on how the tone of the UK-EU negotiations should go with regard to the UK leaving the multination union, Gabriel said;
‘If we organise ‘Brexit’ in the wrong way, then we’ll be in deep trouble, so now we need to make sure that we don’t allow Britain to keep the nice things, so to speak, related to Europe while taking no responsibility’.
Just what the ‘nice things’ are remains to be seen, though Gabriel’s comments come in the context of increasing Euroscepticism among the more radical European political parties. With that in mind, fears have materialised that the UK may end up having to compromise significantly in the future, should plans for leaving the EU and retaining access to the single market be initially blocked by EU negotiators.
South African Rand Advances but Recession Risks and Political Concerns Linger
The Rand’s value may have been up on Tuesday but the present circumstances in South Africa have been firmly against this positive movement.
In particular, while South Africa is back on top as the largest African economy, forecasts have been for no actual growth in 2016 and mounting pressures from volatile commodity costs.
Another source of unrest has been the nation’s political makeup, with early August’s historic election losses for the ruling ANC party making firm governance an even tougher prospect for lawmakers and officials.
GBP/ZAR Exchange Rate Forecast
For the rest of the current week, Pound Sterling/South African Rand exchange rate movement may occur as a result of Wednesday’s UK confidence figure, as well as Thursday and Friday’s UK PMIs for August.
From South Africa, Wednesday will bring trade balance data while Thursday will see the nation’s manufacturing PMI.