Pound to South African Rand (GBP/ZAR) Exchange Rate Lower as Latest Attempt to Block No-Deal Brexit Fails
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate has rebounded from its worst weekly levels, but its advance stopped short this morning and the pair tumbled again to trade in the region of R18.82. This was despite recent weakness in the South African Rand (ZAR).
While this week’s GBP/ZAR losses have been more modest than last week’s impressive gains, the pair is still trending below the week’s opening rate of R19.04.
The Pound (GBP) outlook has remained dominated by Brexit and political uncertainty, limiting its potential for gains. However, the South African Rand has also been weak due to South Africa’s own political and economic concerns.
Pound (GBP) Exchange Rate Rebound Halted by Latest Brexit Developments
Pound Sterling (GBP) exchange rates stalled amid rising concerns that Britain could be headed towards a no-deal Brexit, with yesterday’s brief rise in hopes that one would be avoided proving short-lived.
Britain’s opposition Labour Party held a vote in UK Parliament that would give the chamber options to block a no-deal Brexit from becoming reality if it succeeded.
This was in response to expectations that Theresa May’s successor would be a hardline Brexiteer.
However, Parliament ultimately voted down the attempt to block no-deal due to strong opposition from the ruling Conservative Party.
As a result of the latest attempt to block no-deal Brexit failing, the Pound’s (GBP) potential for gains remains limited.
South African Rand (ZAR) Exchange Rates Recover on SA Data and Oil Prices
Demand for the South African Rand (ZAR) has been generally poor over the past week, as domestic economic and political concerns have worsened.
The latest growth data was concerning, and a row has gripped the ruling African National Congress (ANC) Party over whether or not the South African Reserve Bank (SARB) should adjust its mandate.
Concerns about South African politics have only persisted this week as news emerged that a donation to President Cyril Ramaphosa’s 2017 ANC leadership campaign was under investigation.
Analysts are not concerned that Ramaphosa’s role is under threat, but the additional political uncertainty is still making markets anxious.
The South African Rand was able to recover slightly today despite this. The Rand benefitted from yesterday’s stronger-than-expected retail sales stats, as well as today’s news that oil prices were surging following a suspected attack on oil tankers in the Gulf of Oman.
As the South African Rand is commonly correlated to trade news, the higher oil price had a bullish effect on South African Rand (ZAR) exchange rates.
Pound to South African Rand (GBP/ZAR) Exchange Rate Traders Await Political News
Asides from today’s South African production and confidence data, there is no more data on the way this week for the Pound (GBP) or South African Rand (ZAR) to react to.
This will leave the Pound to South African Rand (GBP/ZAR) exchange rate driven by political developments before markets close for the week.
In the UK, developments over the Conservative Party leadership contest will be most influential, while South African Rand movement will likely be sensitive to developments in the African National Congress.
Investors will also be looking ahead to next week, when more key data including inflation and UK retail sales will be published.
UK data may not be particularly influential for the Pound to South African Rand (GBP/ZAR) exchange rate amid dominating Brexit uncertainty, but SA inflation data due on Wednesday could cause some movement.