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Pound South African Rand Exchange Rate Steady as South Africa’s Inflation Rises in April

May 19, 2021 - Written by John Cameron

GBP/ZAR Exchange Rate Rangebound as South African Economy Remains Vulnerable

The Pound South African Rand (GBP/ZAR) exchange rate held steady today after the latest South African consumer price index for April beat forecasts and rose by 0.7%. The pairing is currently trading around R19.89.

The South African Rand also benefited from a slight rise in retail sales in March. As a result, confidence in the South African economy is continuing to grow.

Analysts at Bloomberg explain:

‘Manufacturing and mining production, and retail sales rose slightly in the three months through March compared with the previous quarter. The country was at the so-called virus alert-level 3 for part of the first quarter after a second wave of Covid-19 cases, which means some economic activity was restricted.’

ZAR continue to firm today despite growing concerns that a new wave of Covid-19 infections – especially across Asia – could limit the growth of the global economy.

Boingotlo Gaselahwe, Bloomberg’s Africa economist, commented:

‘South Africa’s slow pace of vaccine rollout will continue to leave it vulnerable to repeat waves of infection, making for very choppy growth this year.’

Pound (GBP) Exchange Rate Steady as UK Inflation Doubles in April

The Pound (GBP) failed to rise against the South African Rand despite the latest UK consumer price index beating forecasts and doubling in April from 0.3% to 0.6%.

Laith Khalaf, a financial analyst at AJ Bell, commented on the report:

‘At current levels, inflation is nothing to fret about, but there is rising concern that the fiscal and monetary response to the pandemic has sown the seeds of an inflationary scare further down the road.’

However, Sterling investors have become increasingly worried about the Indian variant of Covid-19.

The number of Indian Covid-19 variants have increased up to 28% in two days, according to UK Health Secretary Matt Hancock.

As a result, various experts – including key government advisor Professor Neil Ferguson – have warned that the end date for England’s lockdown end date could be very much hanging in the balance.

Daily cases of Covid-19 in the UK, however, are creeping higher. Today’s cases are up by 412 versus last week. But daily deaths continue to remain low and in single figures.

GBP investors will continue to monitor developments around the Indian variant this week.

Pound South African Rand (GBP/ZAR) Exchange Rate Forecast: Could Rising UK Consumer Morale Boost Sterling?

South African Rand (ZAR) investors will be looking ahead to tomorrow’s interest rate decision rom the South African Reserve Bank (SARB).

Although the SARB is expected to hold the interest rate at 3.5% any dovish commentary about the outlook for South Africa’s economy would be ZAR-negative.

Pound (GBP) traders will monitor tomorrow’s release of the UK GfK consumer confidence report for May.

The Pound South African Rand exchange rate could head higher this week if consumer morale improves.

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TAGS: Pound Rand Forecasts South African Rand Forecasts

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