GBP/ZAR Exchange Rate Falls as South Africa’s Health Minister Boosts Hopes of Easing Lockdown Measures
The Pound to South African Rand (GBP/ZAR) exchange rate dipped by -0.3% today, with the pairing currently trading around R22.782.
The South African Rand (ZAR) edged higher today following the release of May’s South African business confidence index, which rose from 77.8 to 82.8.
Analysts at Reuters commented on the data:
‘South African business confidence recovered from a 35-year low in July, boosted by improving global economic activity, but the measure remained well-below average, over worries about the slow re-opening of the economy and soaring local infections.’
Today also saw Zweli Mkhize, South Africa’s Health Minister, confirm that this week ‘is the right time to ease lockdown’. Mr Mkhize also commented that it was ‘all systems go’, revealing that multiple changes to the nationwide lockdown would be rolled out this month.
As a result, the South African Rand (ZAR) has benefited from growing hopes that the nation’s economy could soon be on the road to recovery as the economy reopens.
Pound (GBP) Sinks as GDP Falls to Record Lows in Second Quarter
The Pound (GBP) suffered today following the release of the flash GDP figure for the second quarter, which fell from -2.2% to -20.4%, its lowest since records begin. Consequently, Sterling traders have become concerned about Britain’s economic performance in the months ahead.
Kieran Cleere, Director of Market Risk Solutions at Silicon Valley Bank, commented on the data:
‘The drop off in economic activity of 20.4% represents one of the deepest developed economies might see, and the deepest on record for the UK, but may be accounted for, in part, by the timing of the lockdown as compared with other economies.’
‘June’s monthly data offered the first window into the recovery as restrictions eased and the economy began to recoup some economic losses growing 8.7% month-on-month. The easier post-lockdown economic gains may soon be realized and so markets will be looking to establish how much of this momentum will be sustained.’
Meanwhile, today also saw the release of the latest UK industrial production figure for June, which beat forecasts and rose from 6% to 9.3%, while manufacturing production rose to 11% in the same month.
As a result, some Sterling investors are optimistic that the UK manufacturing and industrial sector could be on the mend following the easing of Covid-19 lockdown measures.
GBP/ZAR Forecast: Could Weak South African Retail Sales Drag Down the South African Rand?
South African Rand (ZAR) investors will be looking ahead to tomorrow’s release of May’s South African retail sales for May. If these fall below forecasts, however, we could see ZAR shed some of its gains against Sterling.
The GBP/ZAR exchange rate will likely remain subdued for the rest of the week, with no other notable UK economic data release due out until next week. However, if concerns continue to grow over Britain’s economy, then we would see the Pound remain subdued.
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