Pound to Rand Exchange Rate Drops after Worrying UK Income Forecast
The Pound has lost ground to the South African Rand today, falling by -1.4% in the pairing.
This deterioration is mainly down to a strong Rand, although UK domestic data hasn’t helped in the situation.
UK real incomes are expected to be flat in 2018, meaning that the pace of wage growth and inflation will be equal.
While such a situation would reduce the damage caused by the real income squeeze, it would not spark a spending spree.
Under such conditions, the UK could risk seeing inflation rise and wage growth fall again, which would put the economy back in the same difficult situation as before.
Providing a glib summary of the situation, Resolution Foundation Director Torsten Bell said;
‘The good news is that things will get better next year.
The bad news is we may only go from backwards to standing still, with prospects for a meaningful pay recovery still out of sight’.
In the first week of the New Year, the Pound could be affected by PMI readings for the manufacturing, construction and services sectors.
Rising PMI readings could boost the Pound, although some traders will only really be focusing on the high-impact services reading.
South African Rand to Pound Rate Boosted by Hopes for New ANC President
The Rand has been in high demand today, having seen major gains against the Pound, Euro and US Dollar.
This rise follows last week’s election of Cyril Ramaphosa as the new African National Congress (ANC) President; the ANC is South Africa’s current ruling party.
Ramaphosa is not considered a spotless figure in national politics, but his election is still seen as better than the alternative, Nkosazana Dlamini-Zuma.
It is hoped that Ramaphosa could replace controversial President Jacob Zuma in 2018, finally ending his questionable national leadership.
Zuma has faced numerous corruption allegations during his tenure, in addition to triggering Rand crashes with his spontaneous selection of finance ministers.
If Ramaphosa seems likely to take over from Zuma as the New Year begins, the South African Rand could hit a record high against the Pound and other peers.