Pound Sterling South African Rand (GBP/ZAR) Exchange Rate Remains on Back Foot
A weaker-than-expected British Retail Consortium (BRC) like-for-like sales figure has kept the Pound Sterling to South African Rand (GBP/ZAR) exchange rate under pressure today.
As sales saw only a 0.5% increase on the year in July, rather than the 1.5% forecast, this left Pound Sterling (GBP) on a soft footing against its rivals.
Mounting market worries over the odds of the UK leaving the EU without a deal in place have weighed heavily on GBP exchange rates over recent days.
With the Bank of England (BoE) looking set to leave monetary policy on hold for some time to come, given the high levels of uncertainty surrounding Brexit, investors see little reason to favour the Pound.
GBP/ZAR Exchange Rate Struggles to Capitalise on Market Risk Aversion
As global trade tensions remain elevated this could help to bolster the Pound Sterling to South African Rand (GBP/ZAR) exchange rate in the near term.
With the US continuing to adopt a more belligerent approach towards trade the risk-sensitive South African Rand (ZAR) may struggle to hold onto any positive momentum for long.
Markets remain wary over the potential repercussions of South African President Cyril Ramaphosa’s plans for the uncompensated expropriation of land, which has introduced a fresh bout of political fear.
If the South African economy fails to follow through on stronger growth in the months ahead this would leave ZAR exchange rates vulnerable to a fresh decline, especially if global market conditions remain challenging.
UK GDP Forecast to Provoke Fresh Pound Sterling South African Rand (GBP/ZAR) Exchange Rate Volatility
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate could find a rallying point ahead of the weekend, however, if the second quarter UK gross domestic product data impresses.
Forecasts point towards a moderate increase in growth on the quarter, with GDP expected to accelerate from 0.2% to 0.4%.
This could offer the Pound a strong boost against its rivals, encouraging greater confidence in the outlook of the UK economy.
Even if GDP data paints a more encouraging picture of the domestic economy, though, persistent worries over the threat of a no-deal Brexit may keep GBP exchange rates under pressure.
Pound Sterling may also extend its recent losses if June’s trade balance figures highlight a continued vulnerability to deteriorating trade conditions.
Market Jitters to Dominate GBP/ZAR Exchange Rate Outlook
Market risk appetite is likely to dominate the movement of the Pound Sterling to South African Rand (GBP/ZAR) exchange rate this week.
Worries over the prospect of a US-China trade war are likely to limit demand for the South African Rand, especially if the Chinese economy shows signs of slowing.
However, ZAR exchange rates may gain a boost from the SACCI business confidence index for July, providing domestic sentiment shows signs of improvement.
On the other hand, any deterioration in business confidence may put a dampener on the Rand, especially as sentiment is likely to remain under pressure in the months ahead thanks to political jitters.
As long as Brexit uncertainty persists, though, the upside potential of the Pound Sterling to South African Rand (GBP/ZAR) exchange rate looks limited.