Pound South African Rand (GBP/ZAR) Exchange Rate Trims Gains amid Cautiously Upbeat Trade
Article updated 16:50, 15/8/23:
The Pound South African Rand (GBP/ZAR) exchange rate has trimmed its earlier gains this afternoon, as a cautiously upbeat market mood serves to bring minor cushioning to ZAR.
As an acutely risk-sensitive currency, the shift to gently bullish trade is granting some support to the Rand.
However, with a further rate hike from the Bank of England (BoE) seemingly nailed on, it has done little to allow GBP/ZAR to recover.
At the time of writing, GBP/ZAR is trading at around ZAR24.4752, just under 0.7% from the morning’s opening rates.
Original article continues below:
Pound South African Rand (GBP/ZAR) Exchange Rate Rallies as Chinese Data Disappoints
The Pound South African Rand (GBP/ZAR) exchange rate is strengthening this morning, as poor Chinese economic data weighs on ZAR.
At the time of writing, GBP/ZAR is trading at around ZAR24.4027, rising by just over 0.7% from today’s morning rates.
South African Rand (ZAR) Battered by Downbeat Chinese Data
The South African Rand (ZAR) is off to a dismal start this morning, as waning sentiment towards the emerging market negates falling unemployment.
As an acutely risk-sensitive currency, ZAR is feeling the pinch from downbeat Chinese economic news. With China being South Africa’s largest trading partner, the continued barrage of worrying economic data is likely adding further pressure.
The People’s Bank of China (PBoC) cut rates this morning in reaction to growing struggles within the Chinese property sector.
Annabel Bishop, Analyst at Investec, commented:
‘Concerns over the global economic outlook negatively affect the rand, as does higher levels of risk aversion in global financial market. This causes increased volatility, as market reactions to events tend to be more pronounced.’
However, the Rand may be seeing some cushioning as the latest unemployment figures showed a fall over the second quarter. Economists forecast a hold at 32.9%, but unemployment instead edged lower to 32.6%.
Pound (GBP) Volatile amid Shock Wage Growth Data
The Pound (GBP) is seeing volatile trade this morning, following the publication of the latest wage growth and unemployment data.
Wage growth was found to have hit record levels recently, with the latest data showing a rise to 7.8% excluding bonuses. Normally, this would certainly be reason enough for the Bank of England (BoE) to continue hiking rates, as it is considered a key inflationary pressure.
However, unemployment levels shocked, jumping up to 4.2% over June when economists had forecast a hold at 4%.
Economists believe that this figure likely won’t stop another rate hike in September, but it does muddy the waters.
James Smith, Developed Markets Economist at ING, commented:
‘UK wage growth has come in quite a bit higher than expected, and that should all but cement a September rate hike from the Bank of England. Private-sector wage growth, which is the number the BoE focused on, is now at 8.1% from 7.9% previously, when comparing the most recent three months to the same period last year.’
Pound South African Rand Exchange Rate Forecast: UK Inflation Cooldown to Dent GBP?
Looking ahead for the Pound, tomorrow brings the release of the latest consumer price index data. Over July, both core and headline inflation are forecast to cool, with both figures expected to print at 6.8%.
If this prints accurately, Sterling may weaken as it could signal that the BoE won’t need to tighten rates much further.
For the Rand, tomorrow brings the release of the latest retail sales data, reflecting June’s stats. Economists are anticipating a further fall of 0.2%, which may weigh on ZAR by indicating continued weakness in the economy.
Furthermore, risk appetite is likely to shape the pairing. As ZAR is significantly more vulnerable to shifts in the market mood than GBP, bearish trade may bolster GBP/ZAR.