Pound South African Rand Exchange Rate News: GBP/ZAR Retreats as Positive Brexit Progress Bolsters Risk Appetite

GBP/ZAR Exchange Rate Loses Out Despite Positive Brexit Sentiment

The Pound South African Rand (GBP/ZAR) exchange rate traded in a wide range last week, with a shift in Brexit sentiment and a host of UK economic data driving movement in the pairing.

The first half of the week proved to be a rollercoaster, with an initial slide in GBP/ZAR being reversed by Chancellor Philip Hammond’s Autumn Budget, before some persistent Brexit uncertainty wiped out Sterling’s gains almost immediately on Tuesday.

Wednesday then brought an even more notable swing in the Pound when UK Brexit Secretary Dominic Raab expressed confidence that a deal to leave the EU would be finalised within three weeks.

Building on these gains were reports overnight that Theresa May had secured an agreement with the EU to allow UK financial services firms continued access to the European market after Brexit.

However while the Pound continued to punch higher against the majority of its peers, it found itself plummeting against the Rand once again in the second half of the week.

This appeared to be a consequence of a more positive Brexit outlook, helping to ease global tensions and propelling safe-haven currencies such as the US Dollar (USD) notable lower, consequently prompting a jump in risk-sentiment which saw investors flock to the Rand and other emerging economies.

While an upbeat outlook from the Bank of England (BoE) looked to slow its decent, ultimately GBP/ZAR relinquished all of its Brexit gains to close the week lower.

South African Rand (ZAR) Exchange Rates Volatile ahead of US Midterm elections

After leaping higher yesterday evening, the South African Rand (ZAR) is pulling back again this morning as markets remain cautious ahead of the US midterm elections taking place later today.

The election result is expected to have a major impact on the fortunes of the US Dollar (USD), with a number of US President Donald Trump’s fiscal policies hanging on whether he is able to maintain control of the Senate.

Bit with the outcome of the election too close to call, investors are reluctant to take any risks before the result is called, leading to many emerging market currencies softening this morning.

GBP/ZAR Exchange Rate Forecast: Upswing in UK GDP to Bolster Sterling this Week?

Looking ahead to the remainder of this week’s session, the release of the UK’s latest GDP reading on Friday is expected to be one of the main catalysts of movement in the Pound South African Rand (GBP/ZAR) exchange rate this week.

Economists currently forecast the preliminary reading of UK growth will have sped up in the third quarter, climbing from 0.4% to a more robust 0.6% as the warm weather over the summer triggered an upswing in consumer spending.

Meanwhile ZAR investors will be focused on the release of South Africa’s latest production figures on Thursday, with a contraction in either manufacturing or mining output likely to soften the Rand.

Luke Trevail

Luke studied Journalism at university but quickly moved into the financial sector, initially working in retail banking before joining TorFX in 2007. As a Senior Account Manager Luke assists in overseeing the management of the company’s exposure to currency volatility. He uses his years of foreign exchange experience to produce regular news updates exploring the latest currency movements.

Contact Luke Trevail