Home » GBP » Disappointing UK Trade Balance Creates GBP ZAR Exchange Rate Volatility

Disappointing UK Trade Balance Creates GBP ZAR Exchange Rate Volatility

South African Rand Currency Forecast

The GBP ZAR exchange rate fluctuated widely this morning following the release of the UK’s latest Trade Balance report.

Widening of UK Trade Deficit Weighs on Pound (GBP)

The Pound (GBP) initially plummeted against the South African Rand (ZAR) today as the Office for National Statistics (ONS) reported a surge in the UK’s trade deficit.

The deficit gap widened in November rising from £1.55bn to £4.17bn, with the ONS pointing to a jump in imports as being the key reason for the rise, especially in electronics as imports of laptops and tablets from China shot up.

Sterling quickly rallied however following some upbeat Production figures which showed that the UK’s Manufacturing, Construction and Industrial sectors all saw significant growth in November, fooling an abysmal reading in October.

Industrial production in particular saw some impressive gains as it skyrocketed from -1.1% to 2.1%, sailing past expectations that it would only rise to 0.8%.

South African Rand (ZAR) Cuts Gains as Analysts Predict further Political Risks

The South African Rand (ZAR) showed notable improvement over recent weeks, bolstering market confidence in the emerging currency as President Jacob Zuma’s feud with Finance Minister Pravin Gordhan, looked to have finally fizzled out.

However, this may not last as the Rand could face renewed pressure in 2017, with observers expecting tensions to flare up again in the near future. As Guillaume Tresca, emerging-market strategist at Credit Agricole SA explains;

‘My concern is that it’s not the end of the story at all, it’s just the beginning. I don’t think that Zuma will do nothing. He will find another way to strike back. The Rand will remain very hard to trade.’

GBP ZAR Exchange Rate Forecast: SA Manufacturing Report May Strengthen Rand

The GBP ZAR exchange rate may tumble again tomorrow following the release of South Africa’s latest Manufacturing Production figures, which are expected to show a rise from -1.9% to -0.3% in November.

Meanwhile a lull in notable domestic data in the UK is likely to hinder the Pound as movement will likely be driven by ‘Brexit’ sentiment, which has been negatively impacted by the government’s continued lack of clarity over its plans for leaving the EU following an interview with Prime Minister Theresa May over the weekend.

Current Interbank Exchange Rates

At the time of writing the GBP ZAR exchange rate was trending around 16.68 and the ZAR GBP exchange rate was trending around 0.06.