- UK currency steady despite low investor enthusiasm – Positive PMI results fail to inspire
- Cameron debate analysed by media – PM remained problematic on immigration
- South African Rand Slides as rating hangs in the balance – S&P to decide nation’s fate
- EU Referendum to feature ‘Leave’ debate tonight – ZA rating due this evening
The Pound has been a relatively safe bet for investors today, with small gains being seen against most of Sterling’s peers, including the South African Rand.
The Rand has conversely plummeted, due to tangible concerns over how ratings agency Standard and Poor’s will evaluate the nation’s credit rating later on in the day.
UK Economic News: GBP Supportive PMIs Receive Muted Reception due to Immigration Upsets
The Pound has been generally positive against its usual rivals today, although this is largely a result of earlier PMI data, given the prevalent hesitation seen among investors elsewhere.
Pound gains have consisted of 0.2% against the Euro (GBP/EUR) and 0.3% against the South African Rand (GBP/ZAR) and the Israeli New Shekel (GBP/ILS), while losses have been made up of -0.4% against the New Zealand Dollar (GBP/NZD) and -0.9% against the Russian Ruble (GBP/RUB).
The latest domestic data out of the UK has consisted of the composite and services PMIs for May, which have risen above forecasts in both cases.
Less supportive, however, has been the response to the Prime Minister’s televised debate on Sky News, which raised questions over how cohesive the PM’s immigration argument was. Cameron notably declared that Turkey would not enter the EU at any time in the foreseeable future, but most of his cases made were about the potential damage done to the UK economy if it left the EU.
Owing to a lack of polling news, the Pound’s movement has remained fairly consistent.
South African Rand Slumps as Tension Mounts for S&P Announcement
The South African Rand has flopped against its major competitors today; the Pound Sterling (ZAR/GBP), the Euro (ZAR/EUR) and the US Dollar (ZAR/USD).
This is mainly on account of a high level of tension among investors; S&P are set to announce their ratings decision for South African tonight, with the possibility of a downgrade to BB+ (junk) being a very real possibility.
South Africa’s Finance Minister, Pravin Gordhan, has remained positive, saying:
‘I think we’ve done enough to pass the June hurdle. In the next six months we have to do more, particularly in terms of implementing what we’ve decided’.
Elsewhere, the prices of gold, copper and platinum have risen, though this does not seem to have been sufficient to support the Rand.
Something that has also failed to boost the Rand today has been the Standard Bank PMI for May, which has risen 47.9 to 50.2.
Future GBP, ZAR Forecast: S&P ZA Rating and UK ‘Leave’ Campaign Televised Questions due Later
The next events likely to affect the appeal of the Pound and the Rand are due in the evening, with both occurring around the same time.
From the UK will be the retort to Thursday’s ‘Remain’ debate on Sky News, with prominent ‘Leave’ campaigner Michael Gove taking to the screen to answer questions about his plans for the UK out of the EU.
As mentioned above, the Rand may move dramatically this evening when the S&P announcement comes in; the ZAR can be expected to dive if the national credit rating is downgraded.
Current GBP, ZAR Exchange Rates
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate was trending in the region of 22.5200 and the South African Rand to Pound Sterling (ZAR/GBP) exchange rate was trending in the region of 0.0444 today.
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