Pound to South African Rand Exchange Rate Struggles to Sustain Gains
While the Pound Sterling to South African Rand (GBP/ZAR) exchange rate has generally trended with an upside bias this week, the pair has struggled to hold notable gains as no-deal Brexit fears persist and the South African Rand (ZAR) benefits from market risk-sentiment.
Since opening this week at around the level of 18.72, GBP/ZAR has seen mixed movement but has generally moved higher. It has struggled to return to Monday’s two month high of 18.93 however.
Fluctuating between that high, and lows of 18.59, GBP/ZAR trended just around the week’s opening levels again at the time of writing on Thursday.
The Pound (GBP) has been knocked from its advance attempts again by the latest Brexit fears, while the South African Rand is gaining on the latest US-China trade hopes.
Pound (GBP) Exchange Rates Hit by Fresh Brexit Fear as UK Parliament to see Extended Suspension
Even though UK Parliament has been suspended for summer recess for most of new Prime Minister Boris Johnson’s tenure so far, it looks set to be suspended yet again for most of September and half of October.
Yesterday, Boris Johnson successfully requested the Queen’s Speech of his new government to be set after five weeks of Parliament suspension, an unusually long period.
Critics have said the decision for a long prorogation of parliament is aimed at preventing MPs from blocking a potential no-deal Brexit.
This suspension would give parliament little sitting time to pass new legislation before the current Brexit date of October 31st.
Rising fear in markets that Johnson could succeed in forcing through a no-deal Brexit if EU negotiators do not agree to his terms are keeping the Pound unappealing, leading to fresh losses today.
South African Rand (ZAR) Exchange Rates Benefit from China’s Trade Stance
Speculation that China might be softening its stance on the ongoing US-China trade war was the talk of markets today, leading to higher demand for currencies correlated with trade and risk.
The South African Rand (ZAR) benefitted from the news, helping it to keep GBP/ZAR from sustaining major gains.
China indicated today that it would not hurry to retaliate to the latest US trade tariffs and would instead seek de-escalations in the trade war.
Market hopes that this marked a positive shift in tone from China dominated headlines.
However, the South African Rand continued to see pressure from elsewhere. Trade tensions remained high overall, and concerns about South Africa’s economic outlook limited the Rand’s appeal.
Pound to South African Rand (GBP/ZAR) Exchange Rate Could Slump Lower on Brexit Fears
The Pound to South African Rand (GBP/ZAR) is unlikely to be significantly impacted by data before the end of the week, as while some notable ecostats will be published the latest Brexit and trade developments remain even more influential.
Friday’s session will see the publication of Britain’s August consumer confidence report from GfK, as well as mortgage lending and approvals. South African data includes July private sector credit and trade balance figures.
Unless these have a notable impact on the UK or South African economic outlooks, investors will remain focused on political and geopolitical news.
With UK Parliament set to briefly reconvene near the beginning of September, the actions MPs take in the coming weeks will be vital to the Brexit process and the Pound outlook. Worsening no-deal Brexit fears will lead to further Sterling losses.
The South African Rand could see gains if US-China trade relations improve, so Pound to South African Rand (GBP/ZAR) exchange rate investors will be closely watching China’s tone over the coming days.