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Pound Sterling South African Rand (GBP/ZAR) Exchange Rate Falls as UK Wages Rise at the Fastest Pace in a Decade

July 16, 2019 - Written by John Cameron

Pound South African Rand (GBP/ZAR) Exchange Rate Falls as UK Wages Rise at Fastest Pace Since 2008



The Pound Sterling South African Rand (GBP/ZAR) exchange rate slumped by around -1%, and the pairing is currently trading at an inter-bank rate of R17.2250.

On Tuesday morning the Office for National Statistics (ONS) revealed that UK wages excluding bonuses rose at the fastest pace in more than a decade.

In the quarter to May, wages rose by 3.6% and including bonuses wages grew by a higher-than-expected 3.4%.

Commenting on the data, ONS Deputy Head of Labour Market Statistics, Matt Hughes said:

‘The labour market continues to be strong.

‘The number of self-employed part-timers has passes one and a half million for the first time, well over double it was 25 years ago.

‘Regular pay is growing at its fastest pace for nearly 11 years in cash terms, and its quickest for over three years after taking account of inflation.’

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Sterling (GBP) Slumps as UK Labour Market Shows Signs of Weakness



Meanwhile, the ONS also showed that UK unemployment remained at 3.8%, the lowest level since 1974.

However, this could do little to stop the South African Rand rising against Sterling as data revealed signs the labour market could be weakening.

Job vacancies fell to the lowest level in more than a year, and employment growth rose by a worse-than-forecast 28,000.

This was the weakest increase in employment since the three months to August 2018.

Commenting on the data, Chief Economist at Deloitte, Ian Stewart said:

‘The jobs market seems to have defied gravity, with wages rising and unemployment falling even as growth has slowed. The big question is how long can that last?

‘With job vacancies edging lower and firms more cautious on hiring, the pace of job creation could slow from here.’

South African Rand Rises as Markets Price in a Fed Rate Cut



At the start of the week the South African Rand was provided with an upswing of support as markets priced in a US Federal Reserve interest rate cut.

Investors expect the Fed to reduce its interest rate by 25 basis points and make a further cut in September.

Added to this, stronger-than-expected industrial output and retail sales data from China sparked an upswing in risk-appetite.

The world’s second largest economy reported industrial output rebounded from May’s 17-year low.

Pound South African Rand Outlook: Could Higher than Forecast ZA Retail Sales Buoy ZAR?



Looking ahead to Wednesday, the Pound (GBP) could rise against the South African Rand (ZAR) following the release of the UK Consumer Price Index (CPI).

Sterling sentiment could increase if CPI rises as expected in June, meeting the Bank of England’s (BoE) inflation target.

Meanwhile, the Rand could claw back some losses following the release of the South African annual retail sales data.

If retail sales rise higher than forecast in May, it could cause the Pound South African Rand (GBP/ZAR) exchange rate to fall.




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