- UK News Keeps Pound Sturdy – ‘Brexit’ bets down after phone poll
- British Employment Data Poor – Weekly earnings drop, jobless claims up
- Emerging Market Currencies Up – Risk-appetite stronger despite commodity struggles
- Forecast: UK Retail Sales Due Thursday – GBP could be strengthened by positive results
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate has continued to sail downwards this week despite increased Pound strength, as global cross flows lend favour to emerging-market currencies like the Rand.
GBP/ZAR has largely fluctuated since the week began, but briefly hit its lowest point since October 2015, 20.4300, during Wednesday’s session. At the time of writing the pair was trending narrowly around 20.5300.
Largely Disappointing Employment Data Weighs on Pound (GBP)
Sterling (GBP) may begin to struggle again following Wednesday’s session as the latest employment reports printed largely below expectations.
While the key unemployment and claimant count rates remained at their forecast 5.1% and 2.1% respectively, other prints disappointed investors, who had been hoping for Pound sentiment to turn around.
Jobless claims had been expected to drop by 10.0k, but instead increased by 6.7k taking total unemployment to 1.7m for the period between December and February. The BBC quoted Official for National Statistics (ONS) member Nick Palmer on the matter;
“It’s too soon to be certain, but with unemployment up for the first time since mid-2015 – and employment seeing its slowest rise since that period – it’s possible that recent improvements in the labour market may be easing off”
Average weekly earnings also worsened from 2.1% to 1.8%, dulling hopes from Bank of England (BoE) Governor Mark Carney that better earnings could lead to higher rates.
This follows Tuesday’s ‘Brexit’ news of a Telegraph phone poll, which strengthened the Pound after its results showed an increasingly motivated ‘Remain’ camp in the EU referendum campaign.
Slowing South African Inflation Hinders Rand (ZAR) Rally
The South African Rand is up this week because of a series of factors, including continued attempts to oust South Africa’s problematic President, Jacob Zuma.
Poor US data also increased risk-sentiment, and disappointing OPEC news hurt commodity currency appetites, leaving emerging-market currencies a forex favourite.
South African stocks have also been rising despite warnings that the nation’s credit rating could be cut, perhaps relieving some investor fears with regards to the Rand’s near future.
Lastly, South Africa’s key Consumer Price Index (CPI) reports were released on Wednesday morning. The key year-on-year score came in well below forecasts of 7.2%, though it did match analyst expectations of 6.3%.
The month-on-month inflation report slowed from 1.4% to 0.8% as forecast, whereas the core inflation report came in at 5.7%.
However, the dovish dataset was unable to considerably dent the Rand as it continued to push Sterling down.
Pound Sterling to South African Rand Exchange Rate Forecast: UK Data to Drive GBP/ZAR Tomorrow
The Pound’s (GBP) hopes aren’t dried up yet as the week’s final UK datasets are due to be released on Thursday morning – a set of March releases including retail sales, public finances and public sector borrowing.
Most reports are forecast to show worsened results, with the key retail sales print currently expected to slow from 4.1% to 3.8%. The public sector borrowing surplus is predicted to fall from 6.5b to 5.4b.
While the Pound is currently buoyed by increased hopes that the UK will vote to remain in the European Union in June, continued ‘Brexit’ debates and polls are likely to continue hitting British headlines and influencing fluctuating investor movement.
The South African Rand, on the other hand, is likely to see its favour shift according to political developments and risk appetite.
Analysts predict that President Jacob Zuma’s ousting from power would briefly send the Rand lower amid political uncertainty, but Zuma’s continued power would weigh on the ZAR long term.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate currently trends around 20.5300 while the South African Rand to Pound Sterling (ZAR/GBP) exchange rate trends in the region of 0.04865.
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