GBP/ZAR Exchange Rate Rangebound as Sterling Traders Brace for BoE Speech
The Pound South African (GBP/ZAR) exchange rate steadied today and is currently trading around R17.884 on the interbank market.
The South African Rand (ZAR) steadied against the Pound (GBP) following yesterday’s printing of the SA total new vehicle sales for June, which rose from 40.428 to 45.939.
On a yearly basis, however, this was a decrease of 1.6%, with June 2018 seeing 46.663 vehicles sold.
The National Association of Automobile Manufacturers of South Africa (Naamsa), commented:
‘Underlying demand conditions for new vehicles remain weak. In general, low business and consumer confidence, growing pressure on household disposable income and ongoing subdued economic circumstances continued to limit growth prospects.’
Sterling traders, meanwhile, will be awaiting the speech by Mark Carney, the Governor of the Bank of England, and with any dovish comments about the UK economy we could see the GBP/ZAR exchange rate begin to sink.
GBP/ZAR Exchange Rate Flat as UK Construction Falls Deeper into Contraction
The Pound, meanwhile, weakened against many of its competitors following the printing of the UK Markit Construction PMI figures for June, which fell deeper into contraction from 48.6 to 43.1.
Duncan Brock, a Group Director at the Chartered Institute of Procurement and Supply, commented:
‘This abrupt change in the sector’s ability to ride the highs and lows of political uncertainty shows the impact has finally taken its toll as new orders dried up and larger contracts were delayed again. The pain of Brexit indecision was felt across all three sub-sectors but the previously resilient housing sector suffered the fastest drop in three years which is frankly worrying news.’
Brexit jitters, however, have continued to hold back Sterling.
This came following criticism from the trade body Make UK which accused both leadership candidates – Foreign Secretary Jeremy Hunt and leadership favourite Boris Johnson – of ‘zero understanding’ of the consequence of a no-deal exit from the European Union.
Seamus Nevin, a Chief Economist at Make UK, said:
‘Businesses are cutting back on both day-to-day and capital spending with the contraction in output a reflection of growing Brexit uncertainty and, worsening global trade winds.’
ZAR/GBP Exchange Rate Stabilises as US-China Trade Developments in Focus
With no South African economic data due out today, many ZAR traders will instead be focusing on US-China trade developments.
The South African Rand has benefited from a return of risk-appetite, following the two superpowers agreeing upon a tentative ‘trade truce’ over the G20 summit last weekend.
Doubts, however, have begun to creep back, with Rick Scott, the Republican Senator for Florida, saying, ‘I don’t believe there will be a deal’.
GBP/ZAR Forecast: UK Services PMI in the Spotlight
Sterling traders will be looking ahead to tomorrow’s Markit Services PMI figures for June, which are expected to hold at 51.
South African Rand investors, meanwhile, will be looking ahead to tomorrow’s SA business confidence index figures for June.
With China being South Africa’s closest trading partner, any improvement in the Chinese Caixin Services PMI could improve market confidence in the ZAR/GBP exchange rate.