Pound to South African Rand (GBP/ZAR) Exchange Rate Rises as Growth Worries Clip ZAR Gains
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate has risen today and was trading around R18.6880 at the time of writing.
The Rand (ZAR) struggled against the Pound (GBP) yesterday following some disappointing SA GDP figures for the first quarter, which slumped by -3.2%.
Reza Hendrickse, a Portfolio Manager at PPS Investments, commented:
‘Downbeat business conditions have weighed on manufacturing and has been evidenced by subdued business confidence, compounded by the electricity supply disruptions experienced during the period.’
‘In addition, SA has not been immune to the softer global growth environment, which appears to have impacted areas such as mining this quarter.’
And with China being one of SA’s major trading partners, the ongoing US-China trade war is weighing on market sentiment in the South African Rand.
Referencing this, Ian Mathews, Head of Business Development at the investment banking firm Bravura, said:
‘Slower trade growth, protectionism and technology pose challenges to export led growth strategy. With South Africa being a very small open economy, economic events across the world will adversely affect South Africa.’
GBP/ZAR Exchange Rate Edges Higher on Better-than-Expected UK Services Figures
The Pound (GBP) edged higher against the Rand (ZAR) following this morning’s better-than-expected UK Markit services PMI figures for May, which rose above the forecast 50.6 to 51.0.
Duncan Brock, a Group Director at the Chartered Institute of Procurement and Supply, remained downbeat, however, saying:
‘All in all, the sector is still suffering a potent cocktail of depressed demand and uncertainty. [This is] unlikely to be enough for the sector to put in an average performance in the coming months let alone open the floodgates to pre-referendum rates of business expansion.’
Meanwhile, US President Donald Trump’s state visit to the UK has generally overshadowed much political news, with Brexit developments and the question over who will be the next PM side lined for now.
Boris Johnson, the former Foreign Secretary – and current favourite leader for the Tories – has also warned that the Tories could face ‘extinction’ if the party fails to deliver Brexit, further heightening no-deal fears as political uncertainty rises.
Pound South African Rand (GBP/ZAR) Exchange Rate Outlook: Brexit and Tory Leadership Race to Remain in Focus
Pound (GBP) traders are looking ahead to tomorrow’s speech by Mark Carney, the Governor of the Bank of England (BoE) hoping to get a clearer picture of UK monetary policy now that it is clear there will be a new PM.
South African Rand (ZAR) investors will be keeping a close eye on global trade developments, and any signs of tensions easing between the US and China could provide some relief for the risk-averse ZAR.
The Pound South African Rand (GBP/ZAR) exchange rate will likely be driven by political factors in the coming days, and with Brexit uncertainty and a question mark hanging over the Conservative leadership, it is unlikely that we shall see any sudden gains for Sterling.