GBP/ZAR Exchange Rate Rangebound, UK Commons Suspension is Challenged
The Pound South African Rand (GBP/ZAR) held steady at around R18.534 following the UK Supreme Court’s unanimous ruling of Prime Minister Boris Johnson’s suspension of Parliament as unlawful.
Lady Hale, Judge of the Supreme Court, commented:
‘[The court is] bound to conclude that the decision to advise her Majesty to prorogue parliament was unlawful… The effects on the fundamentals of democracy was extreme.’
As a result, the GBP/ZAR exchange stabilised as this now places increased pressure on the Conservative Government to reopen Parliament and face further opposition to a no-deal Brexit on October 31.
Sterling traders are, however, remaining cautiously optimistic as it is now up to House of Commons Speaker John Bercow to call Parliament to reconvene.
However, as Mr Bercow has previously commented on the unlawfulness of the prorogation, Parliament’s reopening is now looking increasingly likely.
In UK economic news meanwhile, August’s public sector borrowing rose from £-1.472 billion to a smaller-than-expected £5.766 billion, however this left the GBP/ZAR pairing relatively unmoved as UK markets brace for the Office for Budget Responsibility’s (OBR) new forecasts.
ZAR/GBP Exchange Rate Flat, US-China Trade Talks Improve Risk-On Mood
The South African Rand (ZAR) held steady following Monday’s ‘productive’ US-China trade discussions, which has continued to encourage a risk-on mood that directly benefits the risk-sensitive ZAR.
The ZAR/GBP exchange rate also stabilised following US Treasury Secretary Steven Mnuchin’s announcement that US-China trade talks would resume in two weeks in Washington.
Mr Mnuchin also added:
‘[US President Donald Trump has] been very clear if we can get the right deal, he wants the deal. If we can’t get the right deal, he’s happy with the tariffs.’
As a result, ZAR has managed to hold onto its gains today as South African markets close for the bank holiday, Heritage Day.
GBP/ZAR Outlook: Sterling Could Rise if Parliament Reopens
Sterling (GBP) traders will be looking ahead to tomorrow’s release of August’s UK BBA mortgage approvals. Any signs of improvement would prove Pound-positive.
Meanwhile, ZAR investors will be paying close attention to US-China trade developments, with any signs of easing tensions between the two superpowers boosting the risk-sensitive South African Rand.
The GBP/ZAR exchange rate could edge higher over the course of the week if the Conservative Government shows a willingness to reopen Parliament following the Supreme Court’s ruling. Consequently, this would prove Pound-positive as a no-deal Brexit could be further challenged ahead of the October deadline.