GBP/ZAR Exchange Rate Climbs Higher as China Vows to ‘Fight to the End’ in US-China Trade Conflict
The Pound South African Rand (GBP/ZAR) exchange rate has soared by 0.8% today and is currently trading around R18.3650 on the inter-bank market.
The South African Rand (ZAR) plummeted against the Pound (GBP) following the South African Reserve Bank’s (SARB) latest rate decision, which left them unchanged at 6.75%.
SARB Governor Lesetja Kganyago commented:
‘The main drivers of the forecast are a lower starting point for food and services inflation, and the revised oil price assumptions. Food price inflation is now expected to average 3.7% in 2019.’
ZAR has also struggled on heightened risk aversion as China, one of South Africa’s closest trading partners, vowed to ‘fight to the end’ in the ongoing US-China trade war.
David Bandurski, a Co-Director of the China Media Project in Hong Kong, commented:
‘They want to send the message that they are being firm, that they are in control, that China’s economy is healthy and capable of self-sufficiency.’
GBP/ZAR Exchange Rate Rises despite Rejections of May’s ‘New Brexit Deal’
The Pound (GBP) meanwhile fell against many of its peers today, with Prime Minister Theresa May’s leadership increasingly called into question as MPs condemned her ‘new Brexit deal’, seeing it as likely to fail a parliamentary vote.
Theresa May’s spokesman, emphasising the already hostile reaction surrounding the ‘new’ withdrawal bill, said:
‘The prime minister is listening to her colleagues about the bill and will be having further discussion.’
However, with news that the withdrawal bill will be delayed until early June – neither published nor debated – this has weighed on market sentiment in the Pound, with fears that a no-deal is becoming increasingly likely as the divide widens between the government and voters.
Tory MP and government whip, Mark Spencer, commented:
‘At the moment, we have not secured agreement to this in the usual channels. Of course we will update the House when we return from recess [in June].’
GBP/ZAR Outlook: Sterling Could Fall if PM’s Withdrawal Bill is Rejected Ahead of June’s Vote
Pound investors will be looking ahead to tomorrow’s retail sales figures for April, which are expected to fall by -0.3%.
However, with political news surrounding Brexit dominating UK headlines, most Pound traders will be paying close attention to any signs that Theresa May’s ‘new Brexit deal’ could fail ahead of the possible early-June vote.
The GBP/ZAR exchange rate will likely remain fixated on political developments, and any signs of a further divide in Parliament over Brexit could see Sterling begin to struggle against the South African Rand.