Pound South African Rand (GBP/ZAR) Exchange Rate Edges up as BoE Leaves Interest Rates Unchanged
The Pound Sterling South African Rand (GBP/ZAR) exchange rate edged up today and the pairing is currently trading at an inter-bank rate of R18.8869.
The Bank of England (BoE) left interest rates unchanged at 0.75%, with all nine policymakers agreeing it was too early to rise rates due to Brexit uncertainty.
Nevertheless, the bank upgraded its UK growth forecast and now expects the economy to grow by 1.5% compared to the 1.2% forecast in February.
In the accompanying minutes from the bank’s latest monetary policy meeting, the BoE said:
‘Global growth had shown signs of stabilisation, and had been a little better than expected.’
Sterling (GBP) Rises despite Weak Commercial Construction
Meanwhile the UK construction sector has posted its first month of growth since January.
The construction PMI rose to 50.5 in April compared to 49.7 in March, aided by a rise in house building.
However, due to the looming Brexit uncertainty commercial work remained weak and construction companies revealed a modest decline in total new orders.
Commenting on this, Duncan Brock, Group Director at the Chartered Institute of Procurement and Supply said:
‘Although the sector marginally moved into growth territory in April, there’s a huge question mark over whether there will be any further improvements in the coming months as new orders fell for the first time since May 2018. This lack of pipeline work has made firms more cautious about their hiring strategies with the first fall in employment levels since July 2016 in a bid to curb their rising costs and reduce their excess capacity.’
South African Rand (ZAR) Slips as Federal Reserve Leaves Interest Rates Unchanged
The South African Rand (ZAR) firmed on Thursday following the US Federal Reserve’s decision to leave interest rates unchanged.
The Fed signalled it had little appetite to adjust interest rates any time soon despite pressures from US President Donald Trump to cut rates.
However, despite the Rand being provided with a boost by the Fed’s ‘patient’ approach, the long term outlook remains uncertain.
Nationwide power cuts and recent economic indicators showing sluggish growth during the first quarter weigh on the South African currency.
Pound South African Rand Outlook: Will the GBP/ZAR Exchange Rate Slip on Disappointing UK Services PMI?
Looking ahead to Friday, the Pound (GBP) may slip against the South African Rand (ZAR) following the release of the UK Markit services PMI.
If April’s PMI shows the UK services sector has contracted for the second month in a row, sentiment in Sterling could be dampened.
Meanwhile, for the South African Rand it is likely that the focus is going to remain on next week’s general elections.
With three polls showing that the African National Congress (ANC) led by Cyril Ramaphosa is clinching a narrow majority, further signs the ANC may struggle could cause the Pound South African Rand (GBP/ZAR) exchange rate to rise.