GBP/ZAR Exchange Rate Rangebound as the Outlook for UK Economy Improves
The Pound South African Rand exchange rate held steady today following the International Monetary Fund’s (IMF) growth report, which showed a more optimistic outlook for the UK economy. The pairing is currently fluctuating around R20.09.
The IMF report upgraded the UK’s growth forecast thanks to the Government’s extensive Covid-19 vaccine rollout programme.
The UK economy is now forecast to grow by 5.3% this year and 5.1% in 2021, upgrades from its previous forecast updated back in January.
Tobias Adrian, director of the IMF’s monetary and capital markets department, highlighted more generalised economic uncertainty, but was overall was optimistic, saying:
‘We are in another tech revolution, a bit like 1999, and there could be an adjustment at some point. But my guess is that in the short run, and perhaps the medium run, financial conditions will remain accommodative and the markets will keep on booming.’
As a result, British market mood has improved, providing a boost for the Pound South African Rand exchange rate.
In UK economic news, today saw the publication of the final UK Services PMI for March, which fell below forecasts to 56.3.
Tim Moore, the Economics Director at IHS Markit, commented on the figure:
‘UK service providers were back in expansion mode in March as confidence in the roadmap for easing lockdown restrictions provided a strong uplift to new orders. Total business activity increased at the fastest rate since August 2020 and this return to growth ended a four-month sequence of decline.’
South African Rand Exchange Rate Steady as IMF Upgrades Outlook for South African Economy
The South African Rand held steady today following news that South Africa had signed a deal with Pfizer to further its vaccination rollout programme.
As a result, ZAR investors are now more hopeful that South Africa could ramp-up its vaccine efforts, pushing down the number of Covid-19 infections and, as a result, cautiously reopen its economy in the months ahead.
Pfizer responded to a Bloomberg email, saying:
‘Our discussions with the government in South Africa to provide access to the vaccine are still ongoing. These discussions are confidential and we are therefore unable to divulge any details at the moment.’
However, South Africa’s economy has taken a severe hit from the Covid-19 pandemic, with the economy shrinking at its most in 100-years last year alone.
The IMF has predicted that South Africa’s GDP will grow by 3.1% in 2021.
Consequently, the ZAR/GBP exchange rate is holding steady as the outlook for the nation’s economy is steadily improving.
Pound South African Rand Exchange Rate Outlook: Could a Rebounding UK Construction Sector Drive up Sterling?
Pound (GBP) traders will be awaiting tomorrow’s publication of the latest UK Markit Construction PMI for March.
Any improvement in the UK’s Construction sector would further boost the Pound South African Rand exchange rate.
South African Rand investors will be eyeing tomorrow’s release of the South African Manufacturing Production Index for February.
If South Africa’s manufacturing sector shows any signs of improvement, then we could see the South African Rand Pound exchange rate steadily head higher.
However, the Pound South African Rand exchange rate could continue to head higher this week if the UK’s Covid-19 situation shows signs of further improvement.