Volatile Pound to South African Rand (GBP/ZAR) Exchange Rate Tumbling despite Stronger UK Data

Pound to South African Rand Exchange Rate Dragged as Rand Rebounds

Following a broad plummet on Wednesday caused by rising fears of a possible US recession, the South African Rand (ZAR) rebounded this morning and the Pound to South African Rand (GBP/ZAR) exchange rate tumbled.

The South African Rand has been one of the market’s most volatile currencies this week, and GBP/ZAR has seen wide, sharp movements.

Since opening this week at the interbank level of 18.34, GBP/ZAR has been fluctuating between lows of 18.22 and highs of 18.67.

After nearing those highs once again overnight, GBP/ZAR has been tumbling as the Rand rebounds this morning. However, analysts predict the Rand’s recovery will likely be short-lived.

Pound (GBP) Exchange Rate Losses Limited as UK Retail Sales Beat Forecasts

The rebounding South African Rand (ZAR) had been pushing GBP/ZAR lower earlier in the morning, but following the publication of Britain’s latest retail sales results the Pound was able to scrape back some losses.

This morning saw the publication of Britain’s July retail sales results, which beat expectations in all major prints and offered the British currency some fresh support.

Rather than contracting as expected month-on-month, UK retail sales grew by 0.2%. The rise in retail sales was partially attributed to strong online sales in July.

It followed yesterday’s news that domestic inflation had risen above Bank of England (BoE) targets, as well as the latest signs that Britain’s opposition Labour Party would attempt to prevent the UK government’s no-deal Brexit.

South African Rand (ZAR) Exchange Rates Rebound from Wednesday Plummet

The South African Rand (ZAR) has been one of the market’s most volatile major currencies this week, and it was one of the currencies that has been hit hardest by market trade and growth jitters.

Yesterday, it emerged that the US yield curve had inverted for the first time since 2007. Historically, this has served as an indicator that a US recession could be possible in the coming years, and the news sent markets into a panic.

The South African Rand was already unappealing on growing US-China trade tensions, as well domestic concerns regarding South African political uncertainties and credit ratings.

Following yesterday’s plummet, the South African Rand rebounded slightly as investors took profit from its low levels. The Rand was also supported by yesterday’s South African retail sales stats, which beat forecasts.

Still, the South African Rand outlook remains fairly bearish overall amid trade jitters and domestic concerns, so today’s rebound may not last.

Politics to Take Focus for Pound to South African Rand (GBP/ZAR) Exchange Rate

Developments in politics, geopolitics, and global growth and trade uncertainties have played a big part in the Pound to South African Rand’s (GBP/ZAR) broad volatility this week. The market focus on these factors is only likely to deepen next week.

The UK and South African economic calendars will be relatively quiet for the coming week. The only upcoming data of note is UK factory and trade data from CBI, as well as South African inflation data.

However, given the impact that US-China jitters and global growth fears have had on trade-correlated currencies like the Rand, further developments in this areas could be particularly influential.

If there are any fresh developments in US-China relations, or fresh US recession speculation, this is likely to influence the Rand.

The Pound to South African Rand (GBP/ZAR) exchange rate will also be influenced by potential developments in Brexit and UK politics, as August comes into its second half and the September reconvening of Parliament edges closer.

Josh Jeffery

Contact Josh Jeffery


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