The New Year has already proven to be a dramatic one for the Pound, with the first two days of trading against the Rand seeing an initial rise before Wednesday’s tumble.
South African news has been limited, though precious metal prices have exerted a positive influence on the Rand so far.
In the post-Christmas period, the interbank Pound Rand exchange rate lurched from a high of 17.24 to a low of 16.64 and largely held this level at the start of January.
Pound Rand Exchange Rate Update: Demand for GBP Weakens despite UK PMI Windfall
The Pound dropped off against the Rand during Wednesday’s trading session, owing partly to Tuesday’s Brexit related news.
This was the announcement that Sir Ivan Rogers, the long-serving and respected UK-EU Ambassador, had resigned.
As well as being unexpected, Rogers’ decision threw investors into a panic, as he was generally considered to be the person best suited for the job of negotiating with EU officials as the UK planned its exit.
Other UK news has been much more positive, although not particularly helpful in boosting the Pound against the Rand.
The UK’s manufacturing and construction PMIs for December both came in much higher than expected.
Rand News: Metal Prices Boost ZAR during Slow Start to 2017
South African news has been limited but this hasn’t prevented the Rand Pound exchange rate from climbing.
In commodity news, both platinum and gold prices have shot up since the start of the year, giving the Rand a lift in the process.
Future GBP/ZAR Exchange Rate Forecast
For the rest of this week and the week to come, Pound Sterling/South African Rand exchange rate movement may occur as a result of Thursday’s UK services PMI and next Wednesday’s UK trade balance figures.
Upcoming South African announcements include this Thursday’s Standard Bank PMI, next Thursday’s manufacturing figures and a further manufacturing PMI later in the week.
In brief, a slight rise is expected for UK services, while respective losses and gains are due for South Africa’s PMI reports. ZA manufacturing is set to improve next week on the month and the year.
At some point in the near future we can also expect the announcement of the Supreme Court verdict on the Government’s Article 50 appeal, which was deliberated towards the end of last year.
A lost case for the Government is expected to strengthen the Pound as it will mean Parliament can debate the triggering of Article 50 and potentially soften the blow when the historic choice to leave the EU finally comes.
Should the appeal prove successful, however, the Pound could crash against the Rand, as this outcome will raise the chances of an economically damaging ‘Hard Brexit’ being chosen by the Government.