South African Rand to Pound Sterling (ZAR/GBP) Exchange Rate Forecast to Fall

The South African Rand was little moved against the Pound on Friday as the currency found support from a firmer Euro, domestic inflation data and a pledge by the South African Central Bank that it will support the economy.

Recent gains for the South African currency are likely to be lost however after news broke that the National Union of Metalworkers of South Africa (Numsa) said that it will continues with its three-week long strike after branch managers agreed a wage offer by employers but rejected conditions relating to future pay negotiations.

Hopes for an end to the strike were raised earlier in the week after one of South Africa’s striking unions broadly accepted a wage increase offer. Up to 20,000 metal workers would have been taken out of the strike. Friday’s events however put that into question.

This week also sae the Steel and Engineering Industries Federation of South Africa (Seifsa) “reluctantly” agreed to staggered salary increases of between 7 and 10%, depending on an employee’s skill level, following a government proposal to break the impasse.

However, in its offer Seifsa insisted on a tightening of a clause known as section 37 that is meant to prevent unions “double-dipping” or pressing for new demands at a factory or company level in spite of an existing industry-wide wage deal.

It was this attempt to alter section 37 that caused Numsa to reject the proposal and continue on with its strike action.

South African Rand Forecast

Not all hope is lost for an end to the strike however as Numsa officials could be open o further negotiations over the weekend. If a deal is reached than it is forecast that the Rand could push higher against the Pound.

Sterling received some support from GDP data which matched economist forecasts.

Against the US Dollar the Rand is likely to soften next week as investors turn to the US Federal Reserve’s latest policy meeting. All eyes will be looking for any signs that the Central Bank is considering raising interest rates.