GBP/ZAR Exchange Rate Falls despite IMF’s Slashing of South Africa’s Growth Forecast
The Pound South African Rand (GBP/ZAR) exchange rate is down today and is currently trading around R18.3641 on the inter-bank market.
The South African Rand (ZAR) rose against the Pound (GBP) as traders have been seeking out riskier currencies following the news that the US and China were edging closer to finalising a trade deal.
As the South African economy is so closely tied to China’s, this has come as relief, with many traders fleeing safe-haven currencies for riskier assets.
US President Donald Trump sounded a note of optimism yesterday, saying:
‘We’re going to win either way. We either win by getting a deal or we win by not getting a deal.’
However, the International Monetary Fund’s recent cutting of South Africa’s growth predictions has weighed on sentiment in the South African Rand today.
The IMF said in its statement:
‘The projected recovery reflects modestly reduced but continued policy uncertainty in the South African economy after the May 2019 elections. Structural bottlenecks would continue to weigh on investment and productivity, while subdued metal export prices were also a risk.’
GBP/ZAR Exchange Rate Sinks as UK Unemployment Hits 44-Year Low
The Pound, meanwhile, has struggled today despite reassuring UK unemployment rate figures, which showed a 44-year low at 3.9%.
Matt Hughes, a Deputy Head of Labour Market Statistics at ONS, was upbeat, saying:
‘The jobs market remains robust, with the number of people in work continuing to grow.’
These were followed by the printing of the UK average earnings excluding bonus figures for February, which came in at 3.4%.
In Brexit news, however, the Labour leader Jeremy Corbyn has slashed hopes of cross-party talks developing a consensus on the UK’s withdrawal deal.
He said that that the talks had effectively stalled, adding:
‘There has to be access to European markets and above all there has to be a dynamic relationship to protect the conditions and rights that we’ve got for environment and consumer workplace rights. We’ve put those cases very robustly to the government and there’s no agreement as yet.’
This has weighed on market confidence in Sterling today, as Brexit developments have been shortcoming since the important delay granted by the EU. And with political uncertainty rising, no-deal fears are beginning to haunt UK markets.
GBP/ZAR Forecast: Sterling Could Rise if Carney is Bullish about the UK Economy
Pound traders are looking ahead to the publication of the UK CPI figures for March tomorrow, which are expected to improve.
These will be followed by the UK Produce Price Index figures for March, and with any signs of an increase this could see the Sterling claw back some losses against the South African Rand.
Tomorrow will also see the printing of the South African CPI figures, which are, however, expected to remain static.
The GBP/ZAR exchange rate could improve tomorrow if the Governor of the Bank of England, Mark Carney, sounds upbeat about the UK economy in his speech tomorrow.