Pound Sterling South African Rand (GBP/ZAR) Exchange Rate Falls as Risk Appetite Rises
The Pound Sterling South African Rand (GBP/ZAR) exchange rate slumped on Tuesday, leaving the pair trading at around R19.2400.
The Rand firmed today, rising against the Pound as the slowdown of Wuhan coronavirus infections boosted risk appetite.
While the number of new cases declined, the total number of reported deaths jumped by 108, rising to 1,016.
However, the focus for traders of the Rand will shift to domestic data and President Cyril Ramaphosa’s state of the nation address.
Traders are eagerly awaiting this afternoon’s manufacturing production and Thursday’s mining production which could dampen ZAR sentiment.
Added to this, President Ramaphosa’s speech is going to be a key mover of ZAR exchange rates. Markets will be looking out for policy and reform clarity amid further power cuts that have hurt confidence.
In a note, analysts at NKC African Economics wrote:
‘The local calendar will be dominated this week by the state of the nation address, with investors eager for clarity on recent comments relating to the possible use of pension funds to reduce energy parastatal Eskom’s debt burden.’
Sterling (GBP) Slumps on Mediocre British Growth
Today saw UK flash GDP stagnate in the final quarter of 2019, while earlier GDP data was revised up to 0.5%.
Sterling remained under pressure as data showed the economy grew by 1.4% in 2019, up from 1.3% growth in 2018. Two years of weak growth weighed on the British currency.
Commenting on this morning’s data, Head of GDP at the ONS, Rob Kent-Smith noted:
‘There was no growth in the last quarter of 2019 as increases in the services and construction sectors were offset by another poor showing from manufacturing, particularly the motor industry.
‘The underlying trade deficit widened, as exports of services fell, partially offset by a fall in goods imports.’
The British manufacturing sector remained under pressure after December’s annual production slumped by -2.5%.
Added to this, November’s production was downwardly revised to -3.3% from -2%, further dampening sentiment.
Pound Rand Outlook: South African Data in Focus
Looking ahead, South African manufacturing production could cause the South African Rand (ZAR) to retreat against the Pound (GBP).
If December’s production slumps further than expected, the Rand will slump.
Meanwhile, Wednesday’s South African retail sales data could cause ZAR to fall further.
If monthly sales decline further than expected in December, the Pound South African Rand (GBP/ZAR) exchange rate will edge higher.