GBP/ZAR Exchange Rate Slides as Brexit Uncertainty Builds
The Pound South African Rand (GBP/ZAR) exchange rate opened last week’s session on a fairly strong footing, with markets dumping the Rand (ZAR) as emerging currencies were hit by another spike in trade tensions following comments by Donald Trump.
While the Pound (GBP) was forced to walk back some of these gains on Tuesday, Sterling found its feet again in the mid-week as an upbeat services survey helped to cap off a solid run of PMI figures in June.
This helped bolster hopes of the Bank of England (BoE) targeting an August rate hike, something which was reinforced by upbeat comments from BoE Governor, Mark Carney later in the week.
However the GBP/ZAR exchange rate fell back again towards the end of the week, with renewed Brexit uncertainty dragging on the Pound, while the Rand was bolstered by an uptick in risk appetite following a downturn in the US Dollar (USD).
Pound Sterling (GBP) Exchange Rate Met by Volatility as UK Gripped by Political Worries
The Pound Sterling (GBP) exchange rate has been met by considerable volatility at the start of this week’s session as the resignation of two senior cabinet ministers sent shock waves across the UK’s political landscape.
Foreign Secretary Boris Johnson and Brexit Secretary David Davis both resigned from their posts on Monday in protest over Theresa May’s Brexit strategy, revealing the deep divisions still in the Conservative party over how to handle leaving the EU.
However while these concerns remain, the Pound found some relief on Tuesday following the release of the UK’s latest GDP figures.
In a first for the UK, the Office for National Statistics (ONS) published a monthly reading of GDP today, with the UK economy revealed to have expanded by a solid 0.3% in May.
South African Rand (ZAR) Exchange Rate Dips as the US Dollar (USD) Finds its Feet
Meanwhile the South African Rand (ZAR) is beating a hasty retreat this morning, with the currency forced to relinquish much of its recent gains following a rebound in the US Dollar (USD).
Demand for the US Dollar has shot back up at the start of this week, with the political turmoil in the UK helping to drive demand for safe haven currencies.
This in turn has also dragged on market risk appetite, causing investors to shun emerging market currencies such as the Rand.
GBP/ZAR Exchange Rate Forecast: Further Political Turmoil to Drag on Sterling?
Looking ahead, movement in the GBP/ZAR exchange rate is likely to be dominated this week by the ongoing political uncertainty in the UK, amid a lull in any other notable data releases.
Johnson and Davis’s departures have sparked a crisis at the top of British politics, with markets fearing Theresa May’s Conservatives could face a possible leadership challenge, driving down demand for the Pound (GBP).
Meanwhile the South African Rand (ZAR) exchange rate may tumble in the latter half of the week with forecasts of a slide in consumer confidence in the second quarter potentially dragging on the Rand.