GBP/ZAR Exchange Rate Volatile in the Face of Global Uncertainty
The Pound South African Rand (GBP/ZAR) exchange rate saw considerable swings last week, starting with a dramatic drop in Sterling through the first half of the week on the back of Brexit jitters.
Markets were left spooked at the start of last week’s session following suggestions from UK International Trade Secretary Liam Fox that the current state of negotiations pointed toward a ‘no-deal’ Brexit.
Given this is seen as the worst possible outcome by many analysts, this drove the GBP/ZAR exchange rate to a one-month low in the middle of the week.
However, there was a dramatic turnaround at the very tail end of the session as the South African Rand was battered by a sell-off of emerging-market currencies, following a 20% drop in the Turkish Lira (TRY) on Friday.
South African Rand (ZAR) Exchange Rates Rebound as Lira (TRY) Sell-Off Eases
The South African Rand (ZAR) is up by around 2% against the Pound (GBP) this morning as the currency rebounds from the two-year low struck at the start of the week.
The Rand went into freefall on Monday as it got caught up in the sell-off surrounding the Turkish Lira (TRY) as fears that Turkey’s financial woes could spread led to a mass exodus of traders from emerging markets.
However, with the Lira appearing to have bottomed out these concerns are now beginning to ease, allowing the Rand to spring back to life.
Many analysts continue to urge caution however, with some forecasting that further volatility is possible.
Pound Sterling (GBP) Exchange Rates Lifted as UK Unemployment Tumbles
At the same time the Pound (GBP) has been buoyed this morning by the release of the UK’s latest labour figures.
According to data published by the Office for National Statistics (ONS) the UK’s jobless rate fell from 4.2% to 4% in June, the lowest level of unemployment since the 1975.
However, denting Sterling’s gains were the accompanying wage growth figures as they revealed that pay remains weak, with wage growth sliding from 2.5% to 2.4% over the same period.
GBP/ZAR Exchange Rate Forecast: Will Rising UK Inflation Strengthen Sterling?
Looking ahead, the Pound South African Rand (GBP/ZAR) exchange rate may find support tomorrow as the UK publishes its latest Consumer Price Index (CPI).
Economists forecast that the CPI data will reveal that UK inflation ticked higher in July, potentially bolstering Sterling sentiment.
However, with the Bank of England (BoE) recently signalling that its next rate hike is likely to be some way off, the uptick in inflation may actually prove to be negative for the Pound if investors fear that it may dampen consumer spending.
Meanwhile, ZAR investors will likely to remained focused on the situation in Turkey for the remainder of this week’s session, with the potential for the South African Rand to experience further swings if they are any other major developments.