July 9, 2020 - Written by John Cameron
STORY LINK Pound South African Rand (GBP/ZAR) Exchange Rate Falls as Investors Take Profits Ahead of ZA Manufacturing Data
Pound Sterling South African Rand (GBP/ZAR) Exchange Rate Slides as Optimistic Traders Buy into Riskier Assets
The Pound Sterling South African Rand (GBP/ZAR) exchange rate slumped by around -0.2% on Thursday morning. This left the pairing trading at around R21.3088.
The Rand was able to make gains against the Pound today as markets were increasingly optimistic about the prospect of a gradual pick up in the global economy.
This sent the safe-haven US Dollar (USD) lower and offered support to the riskier Rand as risk appetite improved during the day’s session.
Added to this, MSCI’s index of developing market currencies hit a one-month high, and an increase in China’s Yuan set the tone. According to Hussein Sayed, Chief Market Strategist at FXTM:
‘Fundamentals and valuations appear to be of limited influence on investor’s decision making. The fear of missing out, monetary and fiscal policy actions, low yields, lower interest rates for longer, are some of the factors that have led to this structural change in markets.’
The Rand was still able to make gains despite the currency backtracking against a handful of currencies ahead of domestic data.
Investors opted to take profits ahead of the country’s manufacturing data which is expected to emphasise the local economy’s weakness.
Added to this, traders continued to focus on the growing number of coronavirus cases around the world as the global count surpassed 12 million yesterday.
Covid-19 cases continued to surge in many countries, including the United States which increases doubts about a swift global economic recovery.
’Absolutely Anxious’ Rishi Sunak Sends Sterling (GBP) Lower
The Pound struggled to make gains against the Rand on Thursday as the UK’s finance minister spooked markets.
Rishi Sunak said that it was too early to tell how quick Britain would recover after slumping into a recession due to the coronavirus pandemic.
When asked earlier today about the country’s economic outlook, Chancellor Rishi Sunak said:
‘It’s too early to tell... we won’t know the exact shape of (the) recovery for a little while.
‘I am absolutely anxious about the state of the economy. We are... entering into a very significant recession, we know that that is happening.’
This was just a day after Sunak unveiled his plans to prevent an employment crisis in his mini Budget.
He pledged £30 billion to stem a potential employment crisis and speaking in parliament on Wednesday Sunak said:
‘I want every person in this House and in the country to know that I will never accept unemployment as an unavoidable outcome.’
Pound South African Rand Outlook: South African Manufacturing Data in Focus
Looking ahead, the South African Rand (ZAR) could edge lower against the Pound (GBP) following the release of today’s domestic data.
If South Africa’s manufacturing data disappoints investors by plummeting further than expected in April and May, it will send the Rand lower.
Meanwhile, the Rand could suffer further losses against Sterling following the release of both May and June’s consumer confidence data.
If South Africa’s SACCI business confidence disappoints investors it could send the Pound South African Rand (GBP/ZAR) exchange rate higher.
International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way,
ensuring you get the best exchange rates on your currency requirements.
TAGS: Pound Rand Forecasts