Pound Sterling to South African Rand (GBP/ZAR) Exchange Rate Forecast: Widening UK Public Debt Sees Pound Softened
Pound Sterling (GBP) Trends Higher ahead of UK GDP Data Today
Recovering from some of the disappointment of yesterday’s poor UK data the Pound (GBP) has strengthened on Wednesday morning, despite the fact that the UK economy is expected to have shown slowing growth in the third quarter. Consequently the Pound Sterling to South African Rand (GBP/ZAR) exchange rate is trending in the region of 22.4930.
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After UK Public Sector Net Borrowing was found to have increased further than forecast in November the Pound (GBP) has weakened, as the Rand (ZAR) trends higher in spite of a lack of domestic data.
GBP/ZAR Exchange Rate Bearish after UK Sales Figure Shortfall
Investors were not particularly encouraged on Monday as a result of the CBI Reported Sales Index for December, which failed to demonstrate growth as strong as forecast. While the index rose from 7 to 19, suggesting that consumer demand in the UK had increased on the month, this nevertheless prompted traders to move away from the softened Pound (GBP). The CBI also published a report highlighting the potential risk that the incoming national living wage may pose to domestic businesses and economic growth, denting demand for Sterling further as the GBP/ZAR exchange rate experienced a volatility day of trading.
Increased UK Public Spending Prompts Pound Sterling (GBP) Downtrend Today
Although the UK GfK Consumer Confidence Survey showed some improvement on the month for December, clocking in at 2 rather than 1, this has failed to particularly rally the Pound today. Fresh disappointment was in store for the bearish currency as the November Public Sector Net Borrowing figure was revealed to be larger than forecast. With government debt having increased by 13.6 billion Pounds, instead of the 11.1 billion pundits had anticipated, concerns have been raised as to whether Chancellor George Osborne will be capable of delivering the fiscal targets laid out in the Autumn Statement.
Thus, in spite of South African data being relatively limited this week the Rand (ZAR) has been making some strong gains against the Pound on Tuesday.
GBP/ZAR Exchange Rate Forecast: Pound Predicted to Soften on Weakening UK GDP
Wednesday’s finalised UK third quarter GDP may offer some limited support to Sterling if the figure is revised upwards. However, if growth is confirmed to have slowed slightly on the year the Pound could see a fresh decline across the board as the odds of a near-term Bank of England (BoE) interest rate rise remain limited.
Should tomorrow’s US Durable Goods Orders show declining output in the world’s largest economy the Rand could benefit from a boost in demand for higher-risk assets, particularly if commodity prices are prompted to rally.
Current GBP, ZAR Exchange Rates
At time of writing, the Pound Sterling to South African Rand (GBP/ZAR) exchange rate was trending higher in the region of 22.5300, while the South African Rand to Pound Sterling (ZAR/GBP) pairing was also making gains around 0.1773.