Political Jitters Leave Pound Sterling South African Rand (GBP/ZAR) Exchange Rate Under Pressure
A lingering sense of political anxiety kept the Pound Sterling to South African Rand (GBP/ZAR) exchange rate under pressure today, even as a fresh YouGov poll pointed towards a stronger Conservative lead.
While the poll appeared to increase the odds of the Conservatives securing the greater number of seats in the upcoming election this failed to shore up Pound Sterling (GBP) for long.
Markets remain wary of placing too much faith in the polls, given their relative inaccuracy in recent years, keeping GBP exchange rates from gaining much ground over the course of the afternoon.
Even though market risk appetite also showed signs of deterioration in the face of the latest US-China trade developments this was not enough to boost the GBP/ZAR exchange rate.
Growing Risks to US-China Trade Deal Fail to Weigh Down South African Rand
Although the odds of an imminent phase one US-China trade agreement appeared to fade in the face of fresh political conflict the South African Rand (ZAR) still pushed higher against its rivals.
ZAR exchange rates could face renewed selling pressure on Friday, however, as forecasts point towards a softening in private sector credit growth.
Evidence that confidence within the South African economy continues to fade would limit the potential for Rand gains, given the degree of anxiety markets still hold over the economic outlook.
Unless private sector credit picks up on the year in October support for the risk-sensitive South African Rand looks set to weaken.
Negative UK Consumer Confidence to Limit Scope for GBP/ZAR Exchange Rate Rebound
Even so, the GBP/ZAR exchange rate could remain on the back foot ahead of the weekend as investors expect another negative reading from the GfK consumer confidence index.
With the index forecast to hold steady at -14 in November this could cast fresh doubt over the potential for a stronger fourth quarter UK gross domestic product.
As strong levels of consumer spending have helped to buoy economic growth in previous quarters any indication of falling confidence could weigh heavily on GBP exchange rates.
However, an uptick in October’s net consumer credit or mortgage approvals figures may help to limit the downside bias of the Pound in the short term.
Extended South African Manufacturing Contraction Set to Dent Rand
The mood towards the South African Rand appears on track to slump on Monday as markets anticipate another dismal month for the South African manufacturing PMI.
If the headline index drops deeper into contraction territory, falling from October’s reading of 48.1, worries over the underlying health of the South African economy are likely to pick up.
Unless the manufacturing sector can show signs of recovering some of its lost momentum the risk of a greater slowdown in growth looks set to drag on ZAR exchange rates.
With the South African gross domestic product already showing signs of sluggishness, any fresh signs of weakness could offer the GBP/ZAR exchange rate a solid rallying point.