GBP/ZAR Exchange Rate Falls as South African Banks Grow despite ‘Challenging Environment’
The Pound South African Rand (GBP/ZAR) exchange rate is down by over 1% today and is currently trading around RA18.7399.
Rand (ZAR) traders are paying close attention to debate surrounding the nationalisation of the South African Reserve Bank (SARB) today, with ongoing debate continuing to rattle market confidence in the Rand.
John Ashbourne, a Senior Emerging Markets Economist at Capital Economics, remains critical, saying:
‘The fact that the list of privately owned central banks includes both the Bank of Japan — which is scrupulously independent — and Turkey’s CBRT — which is widely seen as being politically compromised — suggests that this ownership model does not inherently result in a certain degree of policymaking independence.’
The Rand (ZAR) was also helped along against a weakened Pound (GBP) following the domestic news that profits for the South African financial services group, FirstRand Limited, soared 6% in the second half of 2018.
Alan Pullinger, a FirstRand CEO, commented:
‘FirstRand produced quality top line growth and a superior [Return on Equity], despite a very challenging operating environment.’
Such news, while not high impact for the Rand, will reassure some investors that the South African economy is heading back towards a state of health.
GBP/ZAR Exchange Rate Plummets as Cox Dashes May’s Brexit Hopes
The Pound (GBP) plummeted following an appraisal by the UK Attorney General, Geoffrey Cox, who stated that the Irish backstop risk remains fundamentally unchanged following the EU’s recent ‘legally binding’ amendment to the Brexit deal.
Cox said in the now published legal advice:
‘The legal risk remains unchanged that if through no such demonstrable failure of either party, but simply because of intractable differences… [there is] no internationally lawful means of exiting the Protocol’s arrangements.’
This has proved heavily damaging to the likelihood of Prime Minister Theresa May’s Brexit deal passing through Parliament, with the DUP also pulling its support, along with many of the European Research Group also remaining critical.
Today, meanwhile, saw the publication of the UK GDP figures for January rose 0.5% against December’s figures of -0.4%. Economic data, however, was generally overshadowed by Brexit developments.
GBP/ZAR Outlook: Pound Traders Brace for Possible No-Deal Brexit Vote
South African Rand (ZAR) traders will be looking ahead to tomorrow’s publication of the South African business confidence figures for the first-quarter, and with any signs of an increase this could prove ZAR-positive.
Pound investors will be looking ahead to tomorrow’s Spring Statement tomorrow. However, with the Brexit vote due to set the tone for the next few weeks, any signs of May’s deal being rejected this evening could provide reason for dovishness, which could see Sterling plummet further.
The GBP/ZAR exchange rate will remain sensitive to these Brexit developments over the next few days, and with May’s deal looking increasingly likely to be rejected by the House of Commons, many traders will be bracing for the no-deal vote tomorrow.