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Pound Sterling South African Rand (GBP/ZAR) Exchange Rate Muted as UK Economy Rebounds in May

July 10, 2019 - Written by John Cameron

Pound South African Rand (GBP/ZAR) Exchange Rate Flat as Brexit Pessimism Leaves UK Economy Under Pressure

The Pound Sterling South African Rand (GBP/ZAR) exchange rate remained muted and the pairing is currently trading at an inter-bank rate of R17.6917.

On Wednesday the Office for National Statistics (ONS) revealed that the UK economy expanded by 0.3% in May.

This came after a disappointing slump of -0.4% in April.

Meanwhile, year-on-year GDP rose by a higher-than-forecast 1.5%.

However, despite the UK economy rebounding in May, it seems that Brexit uncertainty has had a stranglehold on the economy.

Commenting on this morning’s data, Suren Thiru, Head of Economics at the British Chambers of Commerce said:

‘Although there was modest rally in GDP growth between April and May, the continued slowdown on the underlying three-month measure is further evidence that the UK economy is faltering under the weight of relentless Brexit uncertainty and tougher global economic conditions.’

South African Rand Under Pressure Ahead of Fed Chair Speech

The South African Rand remained under pressure ahead of tonight’s US FOMC minutes.

Investors are also cautious ahead of today’s speech from Federal Reserve Chair, Jerome Powell.

While last week’s strong US jobs data cooled market expectations of a Fed interest rate cut, a small cut is still likely.

If the Fed signals it is likely to cut interest rates, it could dampen sentiment in the South African Rand.

Sterling (GBP) Flat as Brexit Pessimism Weighs on UK Consumers

Meanwhile, on Tuesday the British Retail Consortium (BRC) revealed that annual sales edged up by a disappointing 0.6% in June.

This was the slowest pace since records began in 1995.

Added to this, like-for-like sales slumped by -1.6%.

Commenting on the effects of the data, Ben Brettell, Senior Economist at Hargreaves Lansdown said:

‘Consumers and business remain hamstrung by Brexit uncertainty.

‘For example yesterday the British Retail Consortium’s report showed average sales growth weakened to 0.6% in the 12 months to June, which is the slowest increase since it began calculating growth in 1995.’

Pound South African Rand Outlook: Will a Dovish BoE Weigh on GBP?

Looking ahead to Thursday, the Pound (GBP) could slip against the South African Rand (ZAR) following the release of the Bank of England’s (BoE) Financial Stability Report.

If the BoE’s tone is overly dovish it could leave Sterling sentiment dampened.

Meanwhile, later in the day the South African Rand could slump following the release of the South African Manufacturing Production Index.

If manufacturing does not rise as high as expected in May, the Pound South African Rand (GBP/ZAR) exchange rate could rise.

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