Data may continue to show a story of disappointing economic growth, but with this applying both in the UK and further afield, recent losses for the British Pound have been relatively limited against both the US Dollar (GBP/USD) and Euro (GBP/EUR). The 4th July holiday will make for a potentially quiet end to the week across the Atlantic, although disappointing Non-Farm Payrolls tomorrow has the potential to rock the US Dollar exchange rate once more. Elsewhere, the South African Rand (ZAR) is posting gains across the board as investors look for yield in the face of policy easing at some of the world’s largest central banks.
Data Shows UK Economy Struggling, Pound Sterling Squeezed
The British Pound exchange rate remains close to recent lows against both the Euro (GBP/EUR) and US Dollar (GBP/USD) after more downbeat UK economic data was released yesterday. The Services Purchasing Managers’ Index (PMI) reading for June managed to scrape in just above the break-even 50.0 mark, but fell short of the expected print of 51.0, adding fresh concern over the state of the underlying economy. Ongoing Brexit uncertainty and the question as to what will happen in Westminster once a new Conservative Party leader moves to become Prime Minister continues to present a challenging environment for businesses and consumers alike to know much about what will happen in the near term.
US Economic Data Also Falls Short, Weighing on US Dollar Exchange Rate
Disappointing economic data wasn’t just the preserve of the UK yesterday, with numbers from the United States doing little to detract from the idea that the Federal Reserve may need to adopt a more dovish stance over its own monetary policy. This has been sufficient to prevent further losses for the Euro US Dollar (EUR/USD) exchange rate, despite the initial reactions to the nominations for senior European Union political posts. Any support could, however, be undermined if opposition from MEP’s to the proposed appointment of Ursula von der Leyen to European Commission President doesn’t begin to abate quickly.
Why Did it Move? Pound Sterling to South African Rand (GBP/ZAR)
The British Pound to South African Rand (GBP/ZAR) exchange rate is approaching lows not seen in almost five months. The Rand is finding some broad-based support off the back of expectations that a US rate cut could make the currency, and its 6.75% interest rate, an attractive investment. A deterioration in US-Europe trade ties could, however, reverse any support here. The GBP/ZAR rate is now at 17.613, down from the 17.900 seen at the start of the week.