British Pound Remains Bullish against South African Rand (GBP/ZAR) as Wage Discussions Fail
The Pound has remained bullish against the South African Rand this week, currently trading at 18.3753, after wage talks have failed to prevent the strike entering its third week of work stoppage next week.
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The Rand is currently undergoing distress after metal workers of NUMSA failed to reach agreements this week following rumours that the strikers would accept the next offer made by employers.
President of NUMSA Andrew Chirwa is now stating: ‘If employers dig a bit deeper, there should be prospects for settlement very soon. We don’t think that the partiers are too far apart regarding the negotiations.’
However with the strike now entering its third week, the Rand is suffering, and the South African economy could be headed toward a recession if the strike nature of South African workers isn’t quelled.
Chirwa continued: ‘Workers are also losing. The economy is also suffering.’
Meanwhile South African President, Jacob Zuma stated: ‘We have enough instruments in our labour-relations machinery to resolve labour disputes. There is no need to resort to violence. The metal industries’ sector needs to go back to full production as soon as possible.’
With the strike nature of South Africa threatening the Rand, investors have become sceptical of further developments within the country. BMW have already pulled out of their plans for expansion in the country; however motor giants Ford have pledged their commitment.
Ford Spokesperson Jim Benintende said: ‘We have a long-term commitment to South Africa… and we’re making news next week about future products. So all we have to say is that we hope all sides come to amicable agreements as soon as possible.’
The Pound meanwhile has seen a string of poor data for the UK following previous weeks of continuous positive figures.
With interest rate hikes hot topic in the UK the Pound reached its highest point in five years against the US Dollar.
Now however, the Pound looks set to remain relatively bullish in the currency market, and domineering in the GBP/ZAR exchange rate.
Sterling is causing problems amongst companies in the UK however with its high exchange rate.
Corporate giants such as AB Foods – owners of Primark – Burberry, and the latest on the list – Synthomer Plc which specialises in chemical manufacturing; are all speculating losses in their profit margins, Burberry claiming it could damage its income by £55m.
Burberry CFO Carol Fairweather stated: ‘This FX impact hurts the reported number but it’s the underlying business that remains very strong and we’re focusing on our key strategies there to make sure we drive our underlying growth.’
Until the South African strikes can be quashed the Rand looks to be set in a period of volatility and softening, meanwhile the Pound is rallying, with high exchange rates a concern for companies.