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Pound Sterling South African Rand (GBP/ZAR) Exchange Rate Slips as UK Job Creation Slows

June 11, 2019 - Written by John Cameron

Pound South African Rand (GBP/ZAR) Exchange Rate Falls despite Record High UK Employment

The Pound Sterling South African Rand (GBP/ZAR) exchange rate slipped and the pairing is currently trading at an inter-bank rate of R18.7259.

The UK unemployment rate remained steady at 3.8% in the three months to April.

The Office for National Statistics (ONS) stated that unemployment has not been lower since the final quarter of 1974.

Meanwhile, the number of people in the UK in employment rose to a record high of 32.75 million, which could do little to buoy Sterling against the Rand.

However, the creation of 32,000 jobs in the three months is a slowdown compared to the previous quarter which saw the number of job created jump to 99,000.

South African Rand (ZAR) Rises as Manufacturing Production Rallies

On Tuesday, data revealed that South African manufacturing production jumped to a higher-than-forecast 4.6% in April.

This was the highest year-on-year rise since June 2016, which likely provided an upswing of support for the Rand.

Manufacturing of basic iron and steel, non-ferrous metal products, machinery and metal products rose 9.4%, which contributed 1.8% to the 4.6% rise.

This was the first positive data since the general election returned President Cyril Ramaphosa to office.

This likely provided a glimmer of hope for the South African economy which likely buoyed the Rand.

Further support for the Rand came from the US-Mexico agreement as risk appetite increased.

The decision to shelve plans to slap Mexican imports to the US with 5% tariffs on Monday provided an upswing of support for the South African Rand.

Pound South African Rand Outlook: Will a Jump in ZA Retail Sales Buoy ZAR?

Looking ahead to Wednesday, the South African Rand (ZAR) could rise against the Pound (GBP) following the release of the South African retail sales.

If retail sales jump higher than forecast in April, it could buoy the Rand.

Meanwhile, Sterling could slump as the Conservative leadership contest heats up.

If front-runner Boris Johnson and other Eurosceptic candidates receive further backing, the risk of a no-deal Brexit will increase and the Pound South African Rand (GBP/ZAR) exchange rate may slide.

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