GBP/ZAR Exchange Rate Rangebound Despite Dismal UK Employment Data for April
The Pound to South African Rand (GBP/ZAR) exchange rate held steady this morning despite UK unemployment claims surging to record highs in April. The pairing is currently trading around R22.38.
Today saw the release of the UK claimant count change report for April, which surged to a worse-than-expected 856.5 thousand despite a forecast of just 150 thousand.
The single month jump in the UK claimant count unemployment rate (from 3.5% to 5.8% is the largest monthly increase since comparable records began in 1971. You need to go back to February of 1947 (on older administrative data) to find a bigger single month increase. pic.twitter.com/9iGcQ7BnXC
— Rupert Seggins (@Rupert_Seggins) May 19, 2020
Sterling suffered from the UK’s ILO unemployment rate. March’s joblessness edged marginally higher by 3.9% but remained markedly below predictions of a rise of 4.3%.
Jonathan Athow, the deputy national statistician at the ONS, commented:
‘While only covering the first weeks of restrictions, our figures show Covid-19 is having a major impact on the labour market.’
‘Through April, though, there were signs of falling employment as real-time tax data show the number of employees on companies’ payrolls fell noticeably, and vacancies were sharply down too, with hospitality again falling steepest.’
Meanwhile, the number of people claiming unemployment benefits rose to almost 2.1 million in April. As a result, this left many Sterling traders anxious about the state of the British economy going forward.
South African Rand (ZAR) Steady on Covid-19 Vaccine Hopes
The South African Rand (ZAR) has continued to benefit from risk-on market mood today. Hopes have continued to rise for a Covid-19 vaccine.
US biotech company Moderna reported that the first stage of human tests had shown signs of a viral immune response.
Easing lockdown measures across Europe and the US have also contributed to the South African Rand’s stability today.
Yesterday also saw US Fed Chairman Jerome Powell say that the Fed was nowhere near running out of ammunition to bolster the US economy throughout the coronavirus-driven economic slump.
Meanwhile, South African Rand (ZAR) investors will be looking ahead to today’s release of South Africa’s manufacturing production index for March. However, if this confirms consensus and falls by -2.15%, we could see the Rand begin to fall.
Today will also see US Fed Chair Jerome Powell testify before Congress. As a result, we could see the South African Rand (ZAR) benefit from any signs of bullishness from the Federal Reserve.
GBP/ZAR Forecast: Could the South African Rand Suffer from a Fall in Risk Appetite?
Pound (GBP) investors will be awaiting tomorrow’s release of the latest UK CPI figure for April. As a result, we could see Sterling suffer as UK economic data to confirms fears for the British economy.
South African Rand (ZAR) traders will be awaiting tomorrow’s release of South Africa’s retail sales report for February. If this falls we could see ZAR suffer as the nation’s economic outlook darkens.
The GBP/ZAR exchange rate will continue to be driven by global risk sentiment this week. If US-China trade tensions continue to escalate, we could see the South African Rand suffer from a risk-off sell-off.