GBP/ZAR Exchange Rate Falls as Boris Johnson Attempts to Legislate a UK Brexit by 2020
The Pound South African Rand (GBP/ZAR) exchange rate eased by -0.4% this morning, with the pairing currently trading around R19.008 as UK markets become increasingly jittery over the prospect of a cliff-edge Brexit crisis next year.
This follows news that Prime Minister Boris Johnson is attempting to write into a law that the UK will leave the EU in 2020 without options to extend the implementation period.
The newly elected House of Commons is due to go ahead on a vote on Johnson’s new plan this Friday, which is leaving some Pound traders feeling nervous of the increasing prospect of a no-deal Brexit next year.
Mark Carney, the Governor of the Bank of England (BoE), was less negative, however, saying:
‘The worst-case scenario is effectively a no-deal, disorderly Brexit. The probability of that scenario has gone down because of the election result and the intention of the new government.
The GBP/ZAR exchange rate could further weaken today if Mark Carney’s speech, due at 19:15 GMT today, shows hints at any potential slowdown in the British economy ahead of the New Year.
ZAR/GBP Exchange Rate Rises on Restored US-China Trade Deal Hopes
The South African Rand (ZAR) rose against the Pound (GBP) as a US-China trade deal looks evermore likely as it edges closer to the finish line.
Monday saw US President Donald Trump say that a ‘phase one’ trade deal with China was nearly complete, save for the translation.
Mr Trump tweeted:
‘I said make sure you have the right translators because you can lose a lot with bad translation. So we’re working on getting that done.’
With China being one of South Africa’s largest trading partners, this has boosted market appetite for the risk-sensitive South African Rand today.
There are no South African scheduled for release this week, with the ZAR/GBP exchange rate being driven by global economic and political developments instead.
GBP/ZAR Outlook: Brexit Developments in Focus
Sterling investors will be looking ahead to tomorrow’s release of the UK Consumer Price Index figure for November, which is expected to ease slightly from 1.5% to 1.4% year-on-year.
Tomorrow will also see the release of the UK PPI Core Output Figure for November, with any signs of improvement likely buoying confidence in the UK economy.
Brexit developments will continue to remain in focus this week, with any indications that Boris Johnson can secure a legally-binding limit to the UK-EU implementation period likely being Pound-negative as traders fear a disorderly exit.
Meanwhile, the South African Rand will continue to be driven by US-China trade developments this week. However, if the two superpowers fail to form a compromise on a ‘phase one’ trade deal, we will see the ZAR/GBP exchange rate sink on heightened risk-aversion.