GBP/ZAR Exchange Rate Retreats on Positive SA Budget Reaction
The Pound to South African Rand (GBP/ZAR) exchange rate remains on the defensive this morning as the Rand continues to be lifted by expectations that South Africa will avoid a ratings downgrade.
At the time of writing GBP/ZAR exchange rate has fallen around 0.5% so far this morning, almost entirely eliminating the pairings gains for the week so far.
South African Rand (ZAR) Rises on Ratings Optimism
Meanwhile, the South African Rand (ZAR) continued to accelerate this morning as hopes that South Africa will narrowly avoid having its credit rating downgraded to junk status continued to buoy the emerging currency.
This comes after the Rand fluctuated wildly on Wednesday after Finance Minister Tito Mboweni delivered his maiden budget speech.
This saw ZAR exchange rates initially nosedive as Mboweni forecast that the proportion of government debt to GDP would climb as high as 60% by 2024.
However the Rand quickly recovered as plans for a partial bailout of state power firm Eskom appeared to be enough for the country to avoid losing its last investment grade credit rating as Moody’s hinted at a reprieve when it delivers it next credit decision at the end of the week.
Pound (GBP) Exchange Rates Steady on Record Budget Surplus
While the Pound (GBP) may be on the back foot against the South African Rand (ZAR) this morning, it is faring better in wider trade following the release of the UK’s latest public finance figures.
According to data published by the Office for National Statistics (ONS), the UK enjoyed a record surplus of £14.9bn in January, rocketing past forecasts of a £11.05bn surplus.
The jump in finances last month comes on the back of strong income tax receipts, with the ONS reporting that returns from self-assessment and capital gains tax were both up last month.
This is also the final finance figures to be released ahead of Chancellor Philip Hammond’s Spring Budget and will likely boost hopes that the Chancellor will have a little more wiggle room with his spending plans for the year ahead.
GBP/ZAR Exchange Rate Forecast: Slowing UK Retail Activity to Weaken Sterling?
Looking ahead, barring any major Brexit development movement in the Pound South African Rand (GBP/ZAR) exchange rate is likely to be driven by the UK’s latest retail report in the tail end of the week.
This may see Sterling continue to drift lower on Friday if the Confederation of British Industry’s (CBI) Distributive Trades index indicates retail activity contracted in February as expected.
Meanwhile the absence of any domestic data is likely to result in movement in the South African driven by external influence, namely the ongoing US-China trade talks.
This could see the Rand extend its gains on Friday if progress in the latest round of talks boosts hopes that the US will delay another increase in tariffs next month.