Pound Sterling South African Rand (GBP/ZAR) Exchange Rate Edges Higher as Markets Move Away From Riskier Currencies
The Pound Sterling South African Rand (GBP/ZAR) exchange rate rose on Monday, leaving the pairing trading at around R18.5310.
The South African Rand slipped against the Pound as investors refrained from supporting the riskier currency ahead of the Christmas holiday break.
Markets remain quiet today, and commenting on this, Société Générale’s Kit Juckes said:
‘We’ve made it past the shortest day, but markets are still struggling to wake up and the morning’s FX range could be covered by a handkerchief. Sterling’s bounced a bit […] the market’s got mince pies on the mind.’
South African Rand (ZAR) Slides despite ‘Breakthrough’ US-China Deal
Despite optimism over a preliminary trade deal between the US and China, the Rand was unable to edge higher against Sterling.
Commenting on this, Capital Economics’ senior emerging markets economist, Jason Tuvey said:
‘Moves around this time are going to be quite small because of the thinness of trading. I wouldn’t expect any major moves now especially after we’ve had the US-China trade deal.’
Meanwhile, over the weekend US President Donald Trump said that a deal would be signed ‘very shortly’ and added:
‘We just achieved a breakthrough on the trade deal and we will be signing it very shortly.’
Added to this, China announced it was lowering tariffs on more than 850 imports. This further decreased trade tensions, but did little to boost the Rand.
Last Week: Sterling (GBP) Suffers Largest Weekly Fall since October 2016
Last week saw the Pound South African Rand (GBP/ZAR) exchange rate slump to the lowest level since mid-September.
The Pound was able to edge higher on Friday after parliament voted in favour of Boris Johnson’s Brexit deal.
The bill has created some certainty for markets as the date for the UK’s departure of the EU is set for 31st January.
However, Johnson’s bill has caused the risk of a no-deal Brexit to increase once again. The Prime Minister has banned any extension of a post-Brexit negotiating period which will end on in December 2020.
After the Prime Minister announced that December 2020 would be a hard deadline for the UK and EU to reach a deal, Sterling suffered the biggest weekly fall since October 2016.
At the start of this week, Sterling was able to claw back some losses, making a slight recovery, although remained close to last week’s lows.
Pound South African Rand Outlook: Will an Increase in Risk Appetite Buoy ZAR?
Looking ahead, the Pound (GBP) is likely to remain buoyed against the South African Rand (ZAR) as it is unlikely there will be further movement over the festive period.
However, the risk-sensitive Rand could receive a boost if tensions between the US and China continue to cool.
If reports reveal a date has been announced for both sides to sign the preliminary deal, risk appetite could rise and cause the Pound South African Rand (GBP/ZAR) exchange rate to slide.