After a solid start to the week, the Pound has flopped against the Rand, owing to concerns about Brexit types.
The Rand has climbed recently on precious metal prices, but may lose these gains based on future US relations with South Africa.
Prior GBP ZAR Gains Erode after Profit-Taking, Brexit Fears
The Pound has fallen considerably against the South African Rand recently, dropping to 17.51 in the pairing despite hitting 17.83 on Monday.
The late rise for Sterling on Monday came from hopes that instead of directly leaving the EU and the single market, the UK might be able to undergo a ‘Transitional Brexit’ and remain trading with the EU beyond the two-year deadline imposed by Article 50. Since then, profit-taking has seen the Pound decline heavily across the board.
The Rand found itself an in-demand option for investors on Tuesday, owing to the latest price movements for copper, gold and platinum all turning upwards.
GBP ZAR Exchange Rate Forecast to Drop if ‘Hard Brexit’ is Aimed For
While the Pound was boosted on Monday by the hopes that a ‘Transitional Brexit’ could take the place of a less advantageous ‘Hard Brexit’, a recent statement from a former World Trade Organisation (WTO) Director General has thrown cold water on this optimism.
Speaking on Tuesday, Pascal Lamy predicted that while the UK Government might well want to keep its ties with the EU close via a ‘Soft Brexit’ or the Transitional variety;
‘What we have seen since the [EU] Referendum is a progressive clarification in the direction of what we all call ‘Hard Brexit’. It means that the UK will [be] likely to exit both the customs union and the internal market and become for the European Union a third country’.
Should the EU elect to ‘punish’ the UK for leaving the Union in this way, the UK economy could well take a hit, which would transfer onto the Pound by extension.
South African Rand Pound Exchange Rate could Depend on ZA-US Relationship
With controversial President Jacob Zuma looking set to remain in power for the time being, future influence on the Rand could well come from Zuma’s overseas interactions with US President-Elect Donald Trump.
As with many global commodity currencies, investors in the Rand have been thrown into panic by Trump’s election as the 45th President, given the anti-globalisation stance adopted by the controversial businessman.
In spite of this, Zuma himself congratulated Trump on his victory, stating that he;
‘looks forward to working closely with the new administration in the United States in promoting peace, security and prosperity around the world, especially on the African continent’.
Should these good intentions translate to direct trade links between South Africa and the US, despite Trump’s pickiness when it comes to deals, the Rand may well appreciate heavily, given that it will ensure an economic lifeline being established.
Recent Interbank Exchange Rates
At the time of writing, the Pound South African Rand (GBP ZAR) exchange rate was trending in the region of 17.51 and the South African Rand Pound (ZAR GBP) exchange rate was trending in the region of 0.05.
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