GBP/ZAR Forecast: Pound to South African Rand Exchange Rate Heads Higher on Disappointing South African Retail Sales

May 20, 2021 - Written by John Cameron

STORY LINK GBP/ZAR Forecast: Pound to South African Rand Exchange Rate Heads Higher on Disappointing South African Retail Sales

The Pound to South African Rand (GBP/ZAR) exchange rate has headed higher this morning following disappointing retail sales data from South Africa.

The GBP/ZAR pairing are currently trending at around 19.90 as the Pound’s gains are capped over Indian variant coronavirus concerns.

Pound Sterling (GBP) Exchange Rate Limited on UK Coronavirus Worries

The Pound has been heading higher against the South African Rand this morning despite creeping concerns over the Indian variant of the coronavirus.

Those age 34 and 35 in the UK have today been invited for their first dose of the coronavirus vaccine highlighting the success of the UK’s vaccine rollout.

Professor Stephen Powis, national medical director for the NHS in England commented on the success of the rollout:

‘The success of the NHS Covid-19 vaccination programme, the biggest in history, is not by accident but down to careful planning and precision by NHS staff who have now delivered 48.5 million doses across England in less than six months.’

However, concerns over the Indian variant of the virus have caused investors to remain cautious surrounding the UK’s roadmap out of lockdown.

Almost 3,000 cases of the Indian variant of the virus have been recorded in the UK so far.

South African Rand (ZAR) Exchange Rate Dips on Worse-Than-Expected Retail Sales

The South African Rand has weakened against many of its major rivals today following a worse-than-expected retail sales data release from South Africa yesterday.
Despite inflation in South Africa rising more than expected to 4.4% annually, this was not enough to worry investors that the South African Reserve Bank would raise interest rates anytime soon.

Jason Tuvey, senior emerging markets economist at Capital Economics, commented on the rise in inflation saying:

‘We think that the Reserve Bank will keep rates on hold for longer than investors currently expect in order to support the economy. Indeed fears of a third wave of COVID-19, combined with the slow vaccine rollout and harsh fiscal austerity, mean that rates will probably stay at their current low for longer than most currently anticipate.’

More so, retail sales in South Africa fell back into contraction during March to -3.7% as the country battled the second wave of coronavirus.

GBP/ZAR Exchange Rate Forecast: UK Retail Sales in Focus

Tomorrow, Pound investors will be keeping an eye on the latest retail sales data from the UK for April which is forecast to have surged 37% annually as much of the high street reopened from lockdown restrictions.

In absence of any notable data from South Africa, ZAR traders will instead be focusing on the global market mood in the coming days.

A further resurgence from the US Dollar would see the South African Rand weaken heading into the weekend.

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TAGS: Pound Rand Forecasts