GBP/ZAR Exchange Rate Accelerates on US-China Trade Fears
The Pound South African Rand (GBP/ZAR) exchange rate is making tentative gains this morning as falling risk appetite weighs heavily on the Rand.
At the time of writing the GBP/ZAR exchange rate is up by roughly 0.3% slightly down from the pairings best levels this morning.
South African Rand (ZAR) Exchange Rates Weakened by US-China Tensions
The recent downtrend in the South African Rand (ZAR) appears to have carried through into the start of this week’s session as markets remain risk adverse in the face of growing tensions between the US and China.
This comes as the row over the arrest of Huawei’s Chief Financial Officer, Meng Wanzhou continues to escalate, with Beijing summoning the US ambassador to protest Meng’s detention and call for the her immediate release.
Most worrying for investors is that the diplomatic spat threatens to overshadow the tariff truce recent agreed by the two powers, with markets shunning risk-sensitive currencies such as the Rand for fears this could reignite trade tensions.
Pound’s (GBP) Gains Capped by Disappointing GDP
Meanwhile, the Pound (GBP) is struggling to capitalise on the Rand weakness this morning as some disappointing UK economic data and Brexit uncertainty drags on Sterling sentiment.
According to data published by the Office for National Statistics (ONS) UK growth slowed from 0.6% to 0.4% over the last three months, with the UK economy only expanding 0.1% in October.
Analysts warn this this bodes poorly for the fourth quarter, with grow expected to have slowed dramatically from a fairly strong third quarter.
GBP/ZAR Exchange Rate Forecast: Brexit Vote to Drive Sterling Lower?
Looking ahead, markets are bracing for some heavy losses in the Pound South African Rand (GBP/ZAR) exchange rate tomorrow as the House of Commons votes on Theresa May’s Brexit deal.
Observers overwhelming forecast that Tuesday’s vote will see MP’s reject the deal currently being offered with most opposition parties and many Conservatives vowing to oppose the agreement over concerns over the Irish backstop.
A rejection of the agreement not only increases the risks of a no-deal Brexit but is also seen as potentially leading to a leadership challenge or a no-confidence vote, fears of which are likely to prove highly negative for Sterling.
Meanwhile ZAR investors are likely to be focused on the release of South Africa’s latest CPI figures, with another strong inflation reading potentially bolstering the case for the South African Reserve Bank to continue raising interest rates in the future.