The Pound managed to rise considerably against the Rand after the Autumn Statement, but recent forecasts have made Sterling’s future seem particularly gloomy.
The Rand’s latest movements have been downhill on all accounts, owing to poor unemployment rate stats and an over-target inflation rate.
Pound Sterling Uncertainty Triggered on IFS Remarks, Poor ZA Data Lowers Rand Appeal
Pound Rand exchange rate movement was positive on Thursday, despite the fallout from the last UK Autumn Statement and an extremely pessimistic Institute for Fiscal Studies (IFS) analysis.
The GBP ZAR exchange rate has risen by 0.7 to 17.68. On the other side, the Rand has been trading at around 0.05 against the Pound.
Recent UK news has been centred on Wednesday’s Autumn Statement, which was abolished after being delivered by Chancellor Philip Hammond. Hammond broadly committed to increasing spending, though at the cost of UK debt hitting two trillion by the 2020s and the debt-GDP ratio rising to 90%.
After the Statement, Institute for Fiscal Studies (IFS) economists said that the UK wage outlook up to the 2020’s was ‘dreadful’, which further contributed to concerns about how the UK would fare in the future.
On the Rand’s side of trading, losses came from the Q3 unemployment rate rising to a 13-year high, alongside a climb in inflation to 6.4%.
As a figure is clearly over the South African Reserve Bank’s top-level target of 6%, this raises the threat of hyperinflation for the South African economy.
Pound Rand Exchange Rate Set to be Shifted by Long Term Economic Forecasting
The Pound has remained surprisingly positive in the face of some highly pessimistic UK forecasts, but may see this investor optimism run out in the near-term.
The latest IFS warnings for the UK’s economic outlook are unlikely to have fallen on deaf ears, so any additional assertions from economists and forecasters that the UK is in for hard times may solidify present negativity and see the GBP ZAR exchange rate crumble.
South African Rand Pound Performance may Depend on Public’s Confidence in Zuma
The Rand may be able to stage a recovery against the Pound in the near-term, should a new public effort to get President Jacob Zuma out of office bear fruit. Following a recent failure by the Democratic Alliance (DA) party, public activists have recently launched a campaign of ‘no confidence’ against the controversial figurehead of the majority African National Congress (ANC).
While the viability of this effort remains to be seen, activist and businessman Sipho Pityana has optimistically declared that;
‘Today, civil society is saying ‘no’ to corruption. We are saying ‘no’ to a President who we see as a champion of corruption’.
Recent Interbank Exchange Rates
At the time of writing, the Pound South African Rand (GBP ZAR) exchange rate was trending in the region of 17.62 and the South African Rand Pound (ZAR GBP) exchange rate was trending in the region of 0.05.
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