The Pound South African Rand (GBP ZAR) exchange rate push higher this morning as markets appeared largely unperturbed by a fall in UK consumer confidence.
Pound (GBP) Strengthens Despite Fall in Consumer Confidence
The Pound was able to continue its advance again the Rand this morning despite the latest data from Gfk showing that household economic sentiment in the UK dropped once again in July.
According to the latest survey’s economic confidence in Britain is now at its lowest levels since the vote for Brexit as the Consumer Confidence index slumped from -10 to -12 over the last month, sliding past estimates it would drop to -11.
The continued fall in sentiment over the last couple of months appears to have been largely driven by a fall in real wages as family finances come under increasing pressure from both soaring inflation and anaemic wage growth.
Joe Staton, Gfk’s head of market dynamics, said;
‘All bets must now be on a further drift downwards in confidence. Yes, employment is booming, but wages have fallen in real terms since 2008 once inflation is taken into account and while consumers have increased borrowing to carry on spending, the household savings ratio is now at a record low’
South Africa Rand (ZAR) Slides ahead of Possible Zuma No Confidence Vote
The South African Rand Remains in a positon of weakness this week ahead of a no confidence vote in President Jacob Zuma on August 8th.
The general consensus is that Zuma will survive the vote although many observers suggest that the President is likely to emerge weaker than before, with the façade of party unity likely to be shattered.
While markets generally do not look upon Zuma’s presidency all the favourably they fear that a weakened government would likely be even more disruptive for the South African economy.
GBP ZAR Forecast: BoE to Strike Hawkish Stance in August?
The GBP ZAR exchange rate next week is likely to be closely tied to the tone of the Bank of England’s latest monetary policy meeting on Thursday, with investors looking for any hints that the bank may be planning to raise interest rates in the near future after a number of hawkish comments from policy makers in recent weeks.
Meanwhile the South African Rand may stumble at the start of next week’s trading session if the country’s latest Trade Balance reports a fall in June’s trade surplus.
Current Interbank Exchange Rates
At the time of writing the GBP ZAR exchange rate was trending around 17.0543 and the ZAR GBP exchange rate was trending around 0.0585.
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