In addition, the rand traded against a weaker commodity price backdrop. Towards the end of the week, the rand’s retreat back below 13/USD was aided by Fitch affirming SA’s sovereign credit rating at BB+ (stable). The scheduled S&P announcement on Friday 2nd June is also widely expected to affirm SA’s rating. In the year to date, the rand’s spot returns against the US$ are 6.3%, placing the rand ninth amongst a basket of 24 emerging market currencies. 


The rand is expected to trade in a range of R13.40/USD – R12.40/USD, R15.00/EUR - R14.00/EUR and R17.10/GBP - R16.10/GBP.

(AK) The UK General Election is just 1 week away! The race is now looking more interesting with the Tory lead having fallen away further and Labour gaining momentum since the Tory manifesto launch. May has struggled to side-step questions on the party’s U-turn on social care funding, and has tried to shift the debate towards Brexit. She has sought to reiterate that the Conservative Government is the only one to entrust with Brexit negotiations, due to officially commence on June 19. Whilst the reputation of pollsters has come in for some criticism over recent years, polling averages are currently indicating a Conservative lead of 9% (with a range of 3-12% across the past 6 polls); an average lead of 9% implies to a 42 seat Tory majority. There are likely to be a number of polls released running up to June 8. On Election Day itself: an exit poll released just after 10pm will give us the first clue of the result of the vote itself.

Sterling weakness since the referendum has benefited some sectors: the April trade deficit ballooned (in value terms) in March to its worst reading since September 2015, however there was robust pick up in volumes in Q1.17. We expect a small narrowing in the deficit for April (released on Friday). Survey data for the UK economy points to a good start to Q2.17 for manufacturers, with ‘hard data’ for April released on Friday. But the shine might come off the pace of expansion in the services sector which is suffering from strong input price pressures. It is worth remembering that the Services PMI (May survey released on Monday) does not directly capture retailing, the sector most exposed to a slowdown in consumer spending. We will get some sense of this in April’s BRC retail sales monitor on Tuesday. The cash squeeze also appears to be hitting the housing market. Next week we will see the Halifax house price index for May and the RICS survey, where we anticipate soft supply and subdued buyer activity.