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Pound South African Rand Exchange Rate Steady, UK Manufacturing PMI Contracts in November

GBP/ZAR Exchange Rate Rangebound, Brexit Uncertainty Hits UK Factory Sector

The Pound South African Rand (GBP/ZAR) exchange rate held steady today, with the pairing currently trading around R18.984, after the UK Markit manufacturing PMI contracted at 48.9 in November.

Rob Dobson, Director at IHS Markit, commented:

‘November saw UK manufacturers squeezed between a rock and hard place, as the uncertainty created by a further delay to Brexit was accompanied by growing paralysis ahead of the forthcoming general election.’

‘Manufacturers across all sectors will be hoping that the New Year brings clarity on the political, trade and economic fronts, providing a more certain foundation to plan and rebuild as the next decade begins.’

UK political developments continue to drive the GBP/ZAR exchange rate, however, with GBP investors becoming increasingly jittery as Prime Minister Boris Johnson continues to dodge an interview with the BBC’s Andrew Neil.

With markets generally favouring a Conservative majority to win the 12th December general election, due to their promises to resolve Brexit uncertainty by 31st January, any slip in the opinion polls for the Tories is Pound-negative.

ZAR/GBP Exchange Rate Holds Steady as SA Vehicle Sales Sink in November

The South African Rand (ZAR) held steady despite this morning’s release of South Africa’s total new vehicle sales in November, which showed a decrease from 51.968 to 44.738.

However, ZAR investors are remaining cautious ahead of tomorrow’s publication of South Africa’s growth figures for the third quarter, which is expected to ease from 3.1% to 0.1% on the quarter.

Analysts at Reuters commented:

‘Low growth and its impact on government revenue has seen the country’s credit rating slide in recent years while public debt and unemployment have soared. However, the [South African Rand] has largely weathered those concerns due mainly to the high yield on offer.’

The risk-sensitive South African Rand (ZAR) has continued to be held back by uncertainty around US-China trade developments, with the ‘phase one’ trade deal ‘stalled because of Hong Kong legislation’, according to the news website Axios.

This follows US President Donald Trump’s signing into law a HK Bill which aims to protect the human rights of Honk Kong protestors, a move which has been heavily criticised by Beijing.

GBP/ZAR Outlook: Could Weak UK Retail Sales Weaken Sterling?

Sterling investors will be awaiting tomorrow’s release of the UK BRC Like-For-Like retail sales figure for November, which is expected to sink by -1.7%, potentially weakening the GBP/ZAR exchange rate.

Tomorrow’s South African GDP figure for the third quarter will remain in focus, with any signs of SA growth slipping into negative territory likely seeing ZAR sink.

Meanwhile, UK political developments will remain in focus this week, with any signs of a hung parliament on 12th December likely weakening the GBP/ZAR exchange rate.