The Pound to South African Rand (GBP/ZAR) exchange rate pushed higher this morning as UK retail sales showed a partial recovery during February.
At the time of writing the GBP/ZAR pairing are currently trading at around 20.7296.
Pound (GBP) Supported by Partial Recovery of UK Retails Sales
The Pound has been supported during this morning’s session following a modest growth in retail sales figures from the UK for February.
A growth of 2.1% was reported in the sector, as the UK prepares to leave its national lockdown measures in the coming weeks.
Richard Lim, CEO, Retail Economics commented on the data, as many consumers in the UK moved to online shopping.
‘As the third lockdown took hold, shoppers effortlessly switched to digital channels as the proportion of online sales reached new record highs. Online grocery shopping continues to grow exponentially and it seems inevitable that some consumers will adopt these shopping habits for good.’
It comes as the UK-EU row over vaccine exports continues, however a joint statement from the two sides hoping to come to an agreement has caused investors to become more optimistic surround Sterling sentiment.
South African Rand (ZAR) Struggles for Direction after SARB Decision
The South African Rand has been struggling for direction toady after the South African Reserve Bank’s (SARB) latest policy decision yesterday.
Although markets had expected that the SARB would take a more hawkish tone surrounding interest rates as inflation rises, there were no signs the bank would become hawkish anytime soon.
The bank instead were more dovish than first expected and the decision weighed on the South African Rand’s sentiment, causing investors to sell-out of the currency.
Economists at ETM Analytics commented on the bank’s latest decision:
‘While market inflation concerns have spiked, the SARB doesn’t seem overly concerned that a sustained episode of surging inflation is ahead of us.’
‘We do see some risk of policy normalisation towards the back end of the year. That said, the degree of policy normalisation is expected to be more moderate than the market is currently pricing in.’
GBP/ZAR Exchange Rate Outlook: UK Q4 GDP Data in Focus
For Pound investors, next week will bring the UK’s final Q4 GDP data for 2020, released on Wednesday .
Along with Manufacturing PMI data on Thursday the releases will give an indication into how the UK’s economy has been performing.
The GBP/ZAR exchange rate will be driven by any further coronavirus developments over the weekend.
If the UK-EU row drags on then Sterling could report some losses heading into next week.