Pound Forecast: Rising UK Services Stats could Bring GBP/ZAR Exchange Rate Rally
The Pound to South African Rand exchange rate (GBP/ZAR) has risen on 1st March, following Rand-weakening news about a trade deficit.
UK domestic data hasn’t been so positive, with a manufacturing PMI reading showing a slowdown in February.
Keeping PMIs in mind, GBP may be able to regain lost ground in the Pound to Rand exchange rate on 5th March, when the UK services PMI for February will be announced.
In the previous services reading for January, it was reported that national sector activity had fallen from 54.2 points to 53.
At the time, Markit Chief Economist Chris Williamson remarked that;
‘The January slowdown pushes the all-sector PMI into dovish territory as far as Bank of England monetary policy is concerned, historically consistent with a loosening bias.
With the survey also indicating weaker upward price pressures, the data therefore cast doubts on any imminent rise in interest rates’.
The February services stats are tipped to show growth during the month, which may be enough to push the Pound back up against the Rand.
Higher sector activity would suggest economic resilience in the UK, in addition to reversing the damage from the previous sector slowdown.
Clash over EU Push for Northern Ireland Integration could Weaken Pound to Rand Exchange Rate
While the GBP/ZAR exchange rate could rise further in the coming week, in the long-term any gains could be limited due to continued disagreements in the Brexit process.
The latest sticking point between UK and EU negotiators has been the issue of the Northern Irish border, and its status after the UK finally separates from the EU.
The EU proposal is for Northern Ireland to remain within the EU customs union after Brexit, to prevent the necessity for a ‘hard border’ with Ireland.
This has been called untenable by the UK government, a sentiment echoed by Northern Irish MPs.
Discussing the issue recently, European Council President Donald Tusk has highlighted the problem by saying;
‘One of the possible negative consequences of [the UK government’s desired] Brexit is a hard border on the island of Ireland.
The EU wants to prevent this scenario. Hence, if no other solution is found, the proposal to “establish a common regulatory area comprising the Union and the United Kingdom in respect of Northern Ireland”.
Until now, no-one has come up with anything wiser than that. In a few hours I will be asking in London whether the UK government has a better idea, that would be as effective in preventing a hard border between Ireland and Northern Ireland’.
If no bipartite solution can be found, Brexit talks may end up stalling for weeks or even months; if this seems likely then the GBP/ZAR exchange rate could drop sharply.
South African Rand Economic Forecast: Rand to Pound Exchange Rate could Advance on GDP Growth
The Rand to Pound exchange rate (ZAR/GBP) has fallen on 1st March, in the wake of reports of a larger-than-expected trade deficit in January.
If the Rand is to recover against the Pound in the near-term, upcoming GDP growth rate figures may need to exceed current predictions.
6th March will bring GDP growth rate figures for Q4 2017.
The year-on-year reading is predicted to rise from 0.8% to 1.30%, but a quarter-on-quarter slowdown from 2% to 1.3% has also been forecast.
Annual readings are usually considered the more important of the two, but a surprise rise in the quarterly figure wouldn’t hurt when it to comes to a ZAR/GBP exchange rate rise.
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