After today’s ‘fat-finger trade’ pushed the Pound up an average of 0.5% across the board, the Pound’s ‘Brexit’-poll induced damage has been reduced somewhat.
It has been a hard couple of weeks for Sterling as repeated polling has shown changes in public sentiment. Two recent pairs of polls showed a substantial increase towards a pro-‘Brexit’ mind-set as public figures focus on the populist issue of immigration, distracting voters from worries associated with the future of the UK’s economy.
Last week saw a continued depreciation of the GBP/ZAR exchange rate. Starting the week at 23.1491, the Pound lost its buying power and the rate plunged to a low of 21.4985.
Currently the Pound to South African Rand exchange rate sits at 21.6350, the small rallying due to an apparent ‘error trade’ during the Asian session.
‘Fat-finger’ Trade Saves Pound (GBP) from Slide
Wounded after a multitude of surveys showed an increase in pro-‘Brexit’ thinking, Sterling is now rallying as a poll released last night showed ‘Remain’ back in the lead. Even with ‘Remain’s’ measly single point lead, the poll served to bolster the Pound this morning in conjunction with last night’s ‘fat-finger’ trade.
Movement during the Asian session provided the Pound with a boost that is mostly being attributed to failsafe programs dumping their investments. This boost is particularly welcome after two polls released early on Monday worked to gut the Pound by showing a weighty increase in pro-‘Brexit’ sentiment within the British public.
Rand Bolstered After Dodged Downgrade and Hopeful Presidential Address
South Africa’s flagging economy gained some recent support thanks to President Jacob Zuma’s address pledging to restore the South African economy through his prescribed nine-part plan. Zuma is keen to point investors towards the country’s fledgling services sector, stating areas like tourism could be of great benefit to South Africa.
Standard & Poor’s decision not to cut South Africa’s credit rating to ‘junk’ status was also a welcome break for the SA economy, which has been plagued by slow growth and a lack of confidence in government unity. Internal policy clashes have been reported frequently and seem to continue to stem from Zuma’s appointment of a more-or-less unknown finance minister.
Forecast: Eyes on Wednesday as Impactful Data is due for Release
Wednesday boasts important ecostats for both the United Kingdom and South Africa.
From the UK; industrial output, manufacturing output and a GDP estimate for May are all set to be released. Any results above the pessimistic forecasts may bode well for the Pound, with a particular boost expected if industrial and manufacturing figures indicate sector production is out of contraction.
South Africa’s quarter-on-quarter and year-on-year GDP growth rates will be released on Wednesday also. Both are forecast to dip, which would place increased pressure on the Rand. However, ZAR gains are possible if Thursday’s mining and manufacturing production reports trounce expectations.
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