UK Consumer Credit Beats Expectations – Pound South African Rand (GBP/ZAR) Exchange Rate Surges
The outlook for the Pound South African Rand (GBP/ZAR) exchange rate brightened on Thursday, supported by the UK’s latest consumer credit report smashing forecasts.
According to the Bank of England (BoE), consumer credit in the UK surged by £1.832bn in April, smashing the previous period’s £425m rise and the market forecast of £1.3bn.
This also marked the largest increase since November 2016.
High consumer credit is a strong indicator of future spending levels and is usually a positive sign – as consumers don’t tend to drastically increase their borrowing levels to such an extent unless their personal incomes are high enough to justify the rise in debt.
It should also reassure the BoE’s Monetary Policy Committee (MPC) that a downturn in consumer spending isn’t currently underway – ultimately boding well for the Pound’s near-term outlook.
South African Rand (ZAR) Exchange Rates Tumble as the South African Trade Surplus Recedes
The South African Rand (ZAR) encountered pressure today as investors responded to a surprising contraction in South Africa’s trade balance.
According to data from the South African Revenue Service, exports from the nation fell by a substantial 9.8% on a monthly basis in April, whilst imports fell by 1.6%, putting the trade surplus at ZAR1.14B, substantially down from the previous ZAR9.47B and the forecast of ZAR4.2B.
This substantial fall in exports boded poorly for the state of the South African economy and ultimately hurt demand for the Rand.
In other news, South Africa’s producer price index (PPI) printed higher at 4.4% in April, up from the previous score of 3.7% and the forecast of 4.3%.
This news boded well for hawkish policy measures from the South African Central Bank, but ultimately failed to bolster the Rand against the Pound.
There are also reports of an outbreak of African swine fever (ASF) – a deadly haemorrhagic disease of pigs –in South Africa, a disease that could pose a renewed threat to the nation’s pork industry.
This outbreak has occurred only shortly after the Listeria outbreak, which is expected to cost near 1 billion rand ($80 million) in losses to the pork value chain.
Pound South African Rand (GBP/ZAR) Exchange Rate Forecast: UK Manufacturing in the Spotlight
The Pound South African Rand (GBP/ZAR) exchange rate could encounter further volatility tomorrow with the release of the UK’s Markit manufacturing PMI, which analysts expect to fall from a score of 53.9 to 53.5.
Investors will also have a raft of US labour market statistics to assess, with upbeat results liable to bolster the US Dollar (USD) and perhaps siphon demand away from the riskier currencies like the Rand.
Looking further ahead, next week will feature the South African GDP growth rate results for Q1, which – expected to fall – could serve to extend Sterling’s lead.