- Pound crashes on PMI results – Contraction seen in all fields
- Historic rate of decline for UK business activity – ‘Brexit’ blamed for result
- South African Rand creeps up against peers – Talk of economic diversification raises Rand’s appeal
- UK GDP data due next week – South Africa to offer PPI printings
The Pound has taken yet another knock recently, having been damaged by the outcome of July’s UK PMI flashes.
The South African Rand has charted a more positive course, having been lifted by governmental commitments to expand national economic interests in the future.
UK Economic News: Pound’s Hopes Dashed by Worrying PMI Data for July
The Pound has been cast down by investors recently, having been effectively dumped in most pairings due to a second day of disappointing economic announcements.
Following on from yesterday’s falling retail sales results for June that send the Pound into a sharp downtrend, the latest domestic data out of the UK has only served to worsen the short and long-term prospects of the national economy.
This has consisted of the services, composite and manufacturing PMI flashes for July, which have fallen into contraction ranges on all three counts.
As these are only flash PMIs – the actual revised results may be higher or lower – though it would take a significant revaluation to push the results back into a positive area.
Responding to the news, Markit Chief Economist Chris Williamson said:
‘July saw a dramatic deterioration in the economy, with business activity slumping at the fastest rate since the height of the global financial crisis in early-2009. The downturn, whether manifesting itself in order book cancellations, a lack of new orders or the postponement or halting of projects, was most commonly attributed in one way or another to ‘Brexit’’.
Pound losses seen recently have included declines of -0.3% against the Euro (GBP EUR) and -0.4% against the US Dollar (GBP USD) and South African Rand (GBP ZAR); this loss against the Rand is effectively a repeat of the previous week’s movement.
South African Rand Appreciates as Minister Davies Recommends Diversification
The value of the Rand has been relatively high of late, as collapses in the appeal of rival currencies have lent a significant boost to the prospects of the South African currency.
While the costs of nationally important metals such as gold and copper have declined recently, the Rand has nonetheless been bolstered by comments from Trade and Industry Minister Rob Davies.
Speaking at the UN conference on Trade and Development, Davies said of South Africa that:
‘The current circumstances require that we intensify our efforts to diversify our economies away from an over reliance on primary, unprocessed products, and move up the value chains through pursuing industrialisation. An integral component of this involves pursuing a development integration agenda on the African continent, which combines market integration, infrastructure and industrial development’.
Future GBP, ZAR Forecast: UK GDP Data and South African PPI Stats due Next Week
As the Pound seems set to remain low against the Rand for the remainder of the week, it remains to look ahead to the week to come for the next news that could influence the GBP ZAR exchange rate.
In the UK’s case, some of the most notable announcements will come on Wednesday, when the preliminary Q2 GDP growth rate results are due. On both the quarter and the year, losses have been forecast.
For South Africa, Thursday will see the PPI results for June announced; at the time of writing, a gain was expected on the month compared to a forecast decline on the year.
Current GBP, ZAR Exchange Rates
The Pound South African Rand (GBP ZAR) exchange rate was trending in the region of 18.7440 and the South African Rand Pound (ZAR GBP) exchange rate was trending in the region of 0.7590 today.
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