Pound Sterling South African Rand (GBP/ZAR) Exchange Rate Edges Higher on Weak ZA Data
The Pound Sterling South African Rand (GBP/ZAR) exchange rate edged higher this morning. This left the pairing trading at around R19.2088.
The Rand struggled against Sterling, despite the upswing in risk appetite after China reported the lowest number of new Covid-19 cases in a day.
This raised hopes, lending more weight to predictions from China’s senior medical advisor that the outbreak could be over by April.
However, against other currencies, the Rand was able to make gains, and rise to its highest level in close to a week.
ZAR likely suffered losses against the Pound after data showed unemployment remained at an 11-year high in the fourth quarter.
Added to this, December’s annual manufacturing output fell by -5.9%, although traders noted the weak growth was already priced in for the Rand.
Commenting on this, ETM analysts noted:
‘Traders seemed to shrug off some dismal domestic data yesterday as the Dollar snapped its 6-day winning streak yesterday and global risk appetite showed signs of recovery, providing some reprieve for emerging market currencies.
‘With risks tilted to the downside for both of these data points, the likelihood of a technical recession in the second half of 2019 remains elevated.’
Meanwhile, data released this morning showed that South African retail sales plummeted by -3.1% between November and December.
Sterling (GBP) Rises on BoE Optimism
The Pound made gains during today’s session following Tuesday’s upbeat UK growth data.
GDP growth in the final quarter of 2019 stagnated, although this was better than expected as investors expected the economy to shrink.
This boosted GBP as it reassured investors that the Bank of England (BoE) is unlikely to slash interest rates.
During last month’s meeting in which the bank left rates on hold, policymakers signalled that they were looking to see if growth picked up after the general election before deciding whether or not to ease monetary policy.
Commenting on this week’s better-than-forecast data, Jeremy Thomson-Cook, chief economist at payments provider Equals Group said:
‘This is a mucky figure with the true sense of the UK economy’s performance occluded by the election of December 12.
‘More forward-looking data […] are more optimistic, and while outright optimism would be misplaced, upgrades to previous quarters are well received.’
Pound Rand Outlook: Will ZAR Extend its Losses?
Looking ahead to Thursday, the South African Rand (ZAR) could extend its losses against the Pound (GBP) following the release of mining production statistics.
If December’s mining production plummets further than expected, the Rand will slide.
Meanwhile, traders will be focused on President Cyril Ramaphosa’s State of the Nation Address.
The President is expected to give details on the government’s plans for the struggling Eskom, which could send the Pound South African Rand (GBP/ZAR) exchange rate lower.
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TAGS: Pound Rand Forecasts