The Pound to Rand exchange rate was 0.45% lower on the day as the GBP continues to unwind the gains seen in the second half of July. GBPZAR had rallied from under the 21.00 figure to trade above 23.00 before the Rand saw support in August.
Last week saw a surprise jump in inflation from the UK with the ONS reporting a 1% climb after analysts had expected a print of 0.6%. This is expected to be short-lived and the data has been unable to boost the price of sterling. The rise in inflation was attributed to rising clothing, transport and haircut prices, with consumers returning to the high street after months of lockdowns.
South Africa Inflation Figures
Tomorrow brings inflation figures from South Africa, with the market expecting a figure of 3.1%, compared to 2.2% last time. That will be followed by a speech later in the day from the Bank of England’s Andy Haldane. In a recent interview, Mr Haldane saw reasons for ‘cautious optimism’ for the UK economy, however, this was later challenged by HSBC. The banking giant was more pessimistic and saw UK GDP falling by 10.3% this year.
On a more positive note, data shared by the Financial Times yesterday suggested that UK consumers were back out in force and could create a record 14.3% rise in GDP for the third quarter. This would provide strong support for the British pound after the country had the worst Q2 fall in output amongst all of the other G7 countries.
The Pound to Rand pair sees key support at a trendline which joins highs from late-2017 and 2018. This level was broken in March and sterling will need to find support around 21.60 for this to hold. If the South African inflation figure is higher than expected tomorrow, the Rand could challenge that support level with support then coming in at the 21.00 and 20.00 levels. Some optimism is growing that the UK can see a bounce back in economic growth but that may not come soon enough for the GBPZAR pair to test the recent 23.00 high set in early-August.
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GBPZAR Weekly Chart
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