Pound to South African Rand Exchange Rate Recovers from Weekly Lows on Friday
Despite the Pound’s (GBP) strong performance against other major currencies in recent sessions, the Pound to South African Rand (GBP/ZAR) exchange rate has spent most of the past week lower due to a strong Rand (ZAR).
GBP/ZAR opened the week at the level of 17.03 but has been unable to hold at that level for long.
The pair hit a weekly low of 16.80 on Friday morning before recovering slightly. At the time of writing, GBP/ZAR trended in the region of 16.92.
Investors have been hesitant to keep buying the South African Rand due to political and economic uncertainty in South Africa over the past week. This made it easier for the pair to recover on Friday.
South African Rand (ZAR) Exchange Rates Slip on Doubts of Zuma Oust
Earlier this week, investors bought the South African Rand amid speculation that the African National Congress’ (ANC) National Executive Committee (NEC) could potentially recall controversial South African President Jacob Zuma.
Since market-favourite Cyril Ramaphosa won the ANC leadership contest in December, investors have been speculating how much longer Zuma will last in the Presidential role.
However, ultimately the NEC indicated that it would not be discussing the potential removal of Zuma this weekend. This caused the Rand to shed some of this week’s gains during Friday trade.
The Rand has also been supported by commodity news in recent sessions, as well as a weaker US Dollar (USD) making emerging market currencies more appealing. This helped to keep GBP/ZAR below the week’s opening levels.
Pound (GBP) Mixed Following Disappointing UK Retail Sales Report
The Pound was supported more by Bank of England (BoE) speculation and ‘soft Brexit’ hopes in recent sessions than UK data, and Friday’s British retail sales results were disappointing enough to limit the GBP/ZAR recovery rally.
UK retail sales were forecast to slip from 1.1% to -0.6% month-on-month in December but instead tumbled from a revised 1% to -1.5%.
The yearly figure slipped to 1.4% rather than the forecast 3%, while the previous figure was revised lower from 1.6% to 1.5%. The prints excluding fuel also fell short of forecasts.
Analysts put the unexpected drop in retail activity down to the increased success of Black Friday in Britain.
With the November shopping event gradually gathering steam outside of the US, much more of Britain’s Christmas shopping is now being done in November rather than December.
Pound to South African Rand (GBP/ZAR) Forecast: Key UK Data Ahead
The Pound to South African Rand exchange rate could see stronger demand over the coming week if Britain’s upcoming data is better-than-expected.
Notable UK ecostats will be published throughout the week, including public sector net borrowing on Tuesday, job market stats on Wednesday and lastly Britain’s Q4 Gross Domestic Product (GDP) projections on Friday.
The Pound outlook is most likely to be impacted by the job market data, particularly the latest wage growth results from November.
UK wage growth has been a hot topic among economists for most of the last year, due to strong inflation and slow wage growth causing a pay squeeze in households.
Analysts fear this pay squeeze could cause consumers to cut back on spending, which would have a negative impact on Britain’s consumer facing economy.
The South African Rand’s strength is also likely to be influential for GBP/ZAR in the coming week.
Any developments from the weekend’s ANC NEC meeting could cause a shift in Rand demand, as well as any other developments on South African President Zuma or the possibility he could leave office sooner than 2019.
On top of this, South Africa’s December Consumer Price Index (CPI) report will be published on Wednesday which could influence the Rand outlook if it surprises.
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