After a positive Month of May for South Africa, the economy has fallen back into recession but currently remains strong against Pound Sterling.
The Pounds relationship with the South African Rand can be used as a good measure of just how big the impact of the Brexit has been, and how investors are reacting to the news.
The South African economy has been under a lot of pressure recently. May was the first month that the South African economy had expanded in over a year, and since May the economy has slipped straight back into recession according to The Standard Bank Purchasing Managers Index (PMI), a set of data compiled by Markit.
The data released on Tuesday showed that output fell, companies cut jobs, the economy is slowing and unemployment remains close to 27%, and ZAR fell 1.6% vs the Dollar off the back of this report whilst actually gaining slightly vs the Pound.
Despite the bleak outlook for the South African economy the Pound is trading at just over a one year low vs the South African Rand, and it’s yet to show any signs of a recovery after dropping into the 19’s due to Brexit, when the pair were trading pretty much at 22.50 prior to the vote.
I think that those with a ZAR to GBP currency requirement may wish to consider making that trade sooner as opposed to later, as current levels haven’t been seen in some time. Data out of South Africa is particularly disappointing at the moment and should it continue I’d expect further downgrades to the South African economy, similar to the downward adjustment made by First National Bank recently.
In the event you have South African Rand to sell for Pound Sterling, you may want to make the most of recent highs. Call us on 01494 725 353 to get a quote.
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