The Pound to South African Rand (GBP/ZAR) exchange rate strengthened broadly and more gains are forecast as last weeks Sterling losses were deemed overdone. Pressures persist on the Rand as power shortages rekindled concerns about South Africa’s ailing economy. Attention is now shifting to Tuesday’s South African Gross Domestic Product (GDP) data.
Economists are forecasting that the report will show that the nation’s economy expanded by just 1.3% in the third quarter of the year, after ticking up just 1% in the second quarter.
‘With a lack of notable events today, we believe that Rand participants will pay most attention to tomorrow’s domestic and international GDP readings. We believe that from a growth differential perspective, Rand risk lies in a softer print,’ said Barclays Africa. Over the weekend the Rand eased against the Pound as on Sunday South Africa’s major power company Eskon declared a major ‘emergency’ and told industrial users that unless they cut their consumption by 10% the national power grid will fail. The news, heightened concerns that South Africa’s creaking utility facilities will become a major factor in holding back economic growth.
Also continuing to put pressure upon the Rand is the continuous decline in commodity prices. As one […]