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Pound South African Rand (GBP/ZAR) Exchange Rate Sinks as Ramaphosa Encourages SA Economic Development

May 30, 2019 - Written by John Cameron

GBP/ZAR Exchange Rate Falls as South African PPI Figures Improve

The Pound South African Rand (GBP/ZAR) exchange rate is down today and is trading around R18.4513 at the time of writing.

The South African Rand (ZAR) rose against the Pound (GBP) following the release of the South African Producer Price Index (PPI) figures for April, which rose above the forecast 0.8% to 1.3%.

The annual PPI figure, also rose above forecast to 6.5%.

ZAR has also benefited from President Cyril Ramaphosa’s announcement of his new cabinet, and with particular focus being on trade, industry and economic development, this has buoyed confidence in the South African Rand.

Mr Ramaphosa said:

‘All South Africans are acutely aware of the great economic difficulties our country has been experiencing and the constraints this has placed on public finances. [I place] priority on revitalising the economy while exercising the greatest care in the use of public funds.’

GBP/ZAR Exchange Rate Decreases as Chancellor Supports Second Referendum

The Pound, meanwhile, failed to claw back its losses following the Chancellor Philip Hammond’s support of a second referendum.

Mr Hammond commented:

‘If we do get to the point when we have to admit that parliament can’t resolve this issue then clearly it will have to be remitted back to the people. I am not sure the general election can resolve the question for the simple reason that both the main political parties are divided on the issues.’

However, with growing signs of a weakening UK economy following the news that car production had been slashed by 45%, according to the Society of Motor Manufactures and Traders (SMMT), this has held back Sterling.

Mike Hawes, a Chief Executive at SMMT, said that the ‘[p]rolonged [Brexit] instability has done untold damage’, blaming no-deal Brexit fears as stalling production and generating a generally pessimistic sense of the UK’s future industry.

Sterling has remained subdued on uncertainty surrounding Brexit as well as the future leadership of the Conservative Party, thus preventing any notable gains for the GBP/ZAR exchange rate.

GBP/ZAR Forecast: Sterling Could Rise on Second Referendum Hopes

ZAR traders will be looking ahead to tomorrow’s publication of the South African private sector credit figures for April, which are expected to rise.

These will be followed by the SA trade balance figures for April, which are expected to ease against March’s 5.00bn.

Tomorrow will see the release of the UK consumer credit figures for April, and with any improvement, this could provide some uplift for Sterling.

The GBP/ZAR exchange rate will be directed by political developments for the rest of the week, with politicians continuing to debate the direction for Brexit and the future leadership – any signs of MPs compromising on a second-referendum would benefit the Pound, as no-deal fears would recede.

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