Pound to South African Rand Exchange Rate Gains Limited by Mixed Rand Appeal
Despite the Pound’s (GBP) broad appeal on fresh Brexit hopes over the past week, the Pound Sterling to South African Rand (GBP/ZAR) exchange rate’s gains have been limited by mixed movement in the South African Rand (ZAR).
Last week’s GBP/ZAR movement was highly mixed. GBP/ZAR climbed from the interbank level of 18.56 to 18.69 throughout the week but didn’t touch on any noteworthy lows or highs throughout.
Movement has been even steadier this week so far, with the interbank level fluctuating in a fairly tight region between lows of 18.55 and highs of 18.80.
GBP/ZAR trended closely to the level of 18.74 at the time of writing, as the Pound climbed on Brexit speculation, but its gains were limited.
Pound (GBP) Exchange Rates Gain on Barnier’s Brexit Comments despite Poor UK Stats
Big, sudden movements have been characterising the Pound (GBP) a lot lately, as today’s solid Sterling advances follow on from yesterday’s fairly notable losses.
Investors sold the Pound yesterday amid speculation that a new UK-EU deal was still far away from being agreed, dampening hopes that a deal could be reached before the current 31st of October Brexit date.
However, today’s comments from EU Chief Negotiator Michel Barnier have once again changed the Pound’s fortunes. The Pound advanced as Barnier suggested that it was still possible for a Brexit deal to be reached by the EU Summit at the end of this week.
Due to the latest Brexit hopes, investors brushed over this morning’s news that Britain’s job market was slowing. Britain’s latest unemployment and job change results came in worse than expected.
Economists, including the Bank of England (BoE), are warning against likely Pound volatility, as the outcome of the coming days and weeks are still shrouded in uncertainty.
UK banks have been instructed not to take big positions betting for or against the pound over the next few days and weeks, Carney tells MPs
— Patrick Hosking (@HoskingTheTimes) October 15, 2019
South African Rand (ZAR) Exchange Rates Mixed amid Demand for both High Yields and Safe Havens
The South African Rand (ZAR), similarly to the Pound (GBP), slipped yesterday and has seen slightly stronger performance today. Overall though the Pound has been more influential, so GBP/ZAR is climbing.
Demand for the Rand has been weighed this week by fresh global safe haven demand, amid doubts that trade relations between the US and China had actually improved much despite US President Donald Trump’s claims of a ‘Phase 1’ partial deal.
As the South African Rand is a currency often correlated to risk and trade sentiment, this news has made investors hesitant to buy the Rand much.
Still, the Rand may have fallen even further against Sterling today if not for the market’s demand for currencies with higher yields. The Rand is a high-yielding currency and has been more appealing than other risk and trade-correlated currencies this week thanks to this.
Pound to South African Rand Exchange Rate Focused on Brexit as UK-EU Talks Heat Up
Could a new UK-EU deal really be possible this week? The outcome is highly uncertain, but it is still certain to cause significant Pound (GBP) movement.
Whether or not the UK and EU are able to reach a new agreement, whether or not talks become more or less optimistic, this is likely to be the primary cause of Pound to South African Rand (GBP/ZAR) exchange rate movement in the coming sessions.
Officials have indicated that a deal being secured as soon as this week depends highly on how well today’s negotiations go, so Sterling could be in for a shift in movement as soon as this evening.
If negotiations go well or a deal is even reached this week, the Pound will see a surge in movement. Sterling would plummet and shed much of its recent strength if UK-EU relations are perceived as worsening though.
These talks will overshadow upcoming ecostats. However, the South African Rand (ZAR) could strengthen and put fresh pressure on the Pound to South African Rand (GBP/ZAR) exchange rate if tomorrow’s South African retail sales stats impress.