Pound Sterling South African Rand (GBP/ZAR) Exchange Rate Edges Higher on Weak ZA Investor Confidence
The Pound Sterling South African Rand (GBP/ZAR) exchange rate rose by around 4% this morning. This left the pairing trading at around R22.6959.
The South African Rand was able to recover on Thursday, after plummeting to an all-time low against the US Dollar (USD) during Wednesday’s session.
However, the Rand was unable to make significant gains against the Pound as investor confidence remained fragile over concerns about the economy.
South Africa currently has some of the strictest restrictions to combat the spread of coronavirus. This included deploying the army to support the police force during the three-week lockdown that started on Friday.
Added to this, economists believe the South African economy is already in recession, dampening sentiment.
Commenting on this, NKC African Economics wrote in a note:
‘Deeply indebted South Africa will carry the wounds of the COVID-19 shock for a longer period, given the upward pressure in spending related to containment efforts and the drag on revenue due to the slump in economic activity.’
Sterling (GBP) Flat as Housing Rebound Grinds to Halt
The Pound was able to make gains this morning, despite data showing the UK’s housing market is grinding to a halt.
After the British government’s shutdown of most of the economy, the housing market’s recovery was cut short.
Nationwide revealed that the recovery which saw prices rise at the strongest pace in more than two years was cut short.
Commenting on this, Nationwide’s chief economist, Robert Gardner said:
‘It is important to note that, while we use a full month’s worth of data to generate the index, the cut-off point is slightly before the end of the month
‘This means that developments following the UK government’s lockdown will not be reflected in these figures.
‘A lack of transactions will make gauging house price trends difficult in the coming months. The medium-term outlook for the housing market is also highly uncertain, where much will depend on the performance of the wider economy.’
Pound Rand Outlook: Will Weak PMI Data Weigh on ZAR?
Looking ahead to Friday, the South African Rand (ZAR) could suffer some losses against Sterling (GBP) following the release of PMI data.
If Standard Bank’s PMI slumps further than forecast in March, the Rand could suffer significant losses.
Meanwhile, the Pound is likely to fall following the release of Markit’s final reading of the UK services PMI.
If the highly-anticipated services PMI plunges deeper into contraction territory, the Pound South African Rand (GBP/ZAR) exchange rate will be left flat.