GBP/ZAR Exchange Rate Rangebound as Risk-Appetite Provides Uplift for South African Rand
The Pound South African Rand (GBP/ZAR) exchange rate held steady today and is currently trading around R17.986 at the time of writing.
The South African Rand (ZAR) held steady against the Pound (GBP) as traders await the outcome of the G20 summit in Japan, which will see US President Donald Trump meet with Chinese President Xi Jinping to discuss a possible trade deal.
As the South African Rand is a risk-correlated currency, hopes of a deal have lent some support for ZAR as risk-appetite has returned ahead of hopeful remarks from US Treasury Secretary Steven Mnuchin earlier this week.
Mr Mnuchin said:
‘We were about 90% of the way there [with a deal] and I think there’s a path to complete this.’
Today saw the release of the South African private sector credit figures for May, which fell below the forecast increase of 8.00% to 7.66%.
South Africa’s trade balance figures for May also eased below consensus, falling to 1.74bn.
GBP/ZAR Exchange Rate Flat as UK Growth Figures Hold Steady
The Pound, meanwhile, was unmoved following the publication of the UK growth figures for the first quarter, which remained steady at 0.5%.
Howard Archer, a Chief Economic Advisor for the forecasting group EY Item Club, remained downbeat in his assessment, saying:
‘The UK economy has clearly suffered a serious slowdown since the first quarter and we suspect GDP could very well contract slightly in the second quarter.’
Boris Johnson, the current Tory leadership favourite, has also left many Pound traders remaining jittery, however, after saying he would not rule out a no-deal Brexit.
Mr Johnson said:
‘I’m not attracted to the idea of a no-deal exit from the EU but, you know, I think it would be absolutely folly to rule it out. I think it’s an essential tool of our negotiation.’
As a result many Sterling traders have remained cautious as both potential leaders, Foreign Secretary Jeremy Hunt and Mr Johnson, have failed to rule out the UK’s chaotic exit from the European Union on 31 October.
GBP/ZAR Forecast: ZAR Could Rise on US-China Trade Deal
South African Rand investors will be looking ahead to Monday’s printing of the SA business confidence index figures for Jun.
Any signs of an increase could bolster South African market optimism, as this would provide some uplift for its struggling economy.
With China being South Africa’s closest trading partner, Monday’s Caixin Manufacturing PMI for June could prove influential on the South African Rand, should the Chinese economy show any signs of improving.
Also, if the US and China show any signs of securing a trade deal over this weekend, we could see the ZAR/GBP exchange rate hold onto some of its gains into next week.
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