GBP/ZAR Exchange Rate Rangebound as South African Joblessness Rises to Highest Level Since 2008
The Pound South African Rand held steady today despite South Africa’s unemployment level rising to a new high at 32.6% in the first quarter of this year. The pairing is currently trading around R19.52.
The South African Rand struggled to gain against Sterling today as concerns rise over South Africa’s unemployment crisis, which hit its highest levels since the survey began on 2008.
Peter Attard Montalto, head of capital markets research at Intellidex, was more confident about joblessness easing out later in the year, commenting:
‘Unemployment is unlikely to return to pre-crisis levels given we don’t see real per capita output returning to pre-crisis levels. The economy would need to see trend growth well above 2.5% rather than the 1.7% we see to absorb the lost jobs.’
Today also saw the release of the latest South African total new vehicle sales report for May.
The figure rose from 35616 to 38337 last month, buoying confidence in one of South Africa’s most lucrative sectors.
South Africa’s economic outlook continues to improve as the nation battles against the possibility of a third-wave of the Covid-19 pandemic.
NKC African Economics has upgraded the outlook for the first-quarter, predicting the nation’s growth to increase by 1.4% in a quarterly expansion.
‘Positive data releases, an uptick in global economic activity, robust international trade, elevated commodity prices and improved mobility.’
Pound (GBP) Exchange Rate Steady as UK Factory Data Improves as Orders Surge
The Pound (GBP) is rangebound against ZAR today despite the latest UK factory PMI hitting a record higher as orders surge.
Analysts at Markit, who compiles the PMI statistics, commented:
‘Companies linked new order growth to rising business confidence, the further re-opening of the UK economy and reduced issues relating to COVID-19.’
Meanwhile, rising cases of Covid-19 in the UK has sparked concerns of a possible delay to further easing lockdown measures on 21 June.
Prime Minister Boris Johnson’s spokesman commented:
‘The prime minister has said on a number of occasions that we haven’t seen anything in the data but we will continue to look at the data, we will continue to look at the latest scientific evidence as we move through June towards 21 June.’
Last week Boris Johnson said that ‘we may need to wait’ for more data on the India variant and its degree of transmissibility. As a result, GBP investors are remaining cautious.
GBP/ZAR Exchange Rate Forecast: Could UK Covid-19 Fears Limit Sterling This Week?
Pound (GBP) investors will be awaiting tomorrow’s release of the UK mortgage approvals figure for April.
Any signs of a recovering British economy would drive up the GBP/ZAR exchange rate.
Sterling traders will continue to monitor the nation’s Covid-19 situation this week.
If daily infection rates continue to head higher in the UK, then we could see GBP struggle as investors become more concerned about a possible delay to the easing of lockdown measures later this month.
Risk sentiment will also influence the GBP/ZAR exchange rate this week. If global market mood continues to improve, then the risk-sensitive South African Rand would head higher.