GBP/ZAR Exchange Rate Buoyed by Brexit Optimism
The Pound South African Rand (GBP/ZAR) exchange rate is trending higher today, buoyed by the latest headlines concerning Brexit.
At the time of writing the GBP/ZAR exchange rate is currently trading at around ZAR18.7660 up by around 0.6% since this the start of the European session.
How Will Opposition Brexit Legislation Impact the Pound (GBP)?
The Pound (GBP) is trending higher this afternoon in response to reports that Labour and other oppositions parties have agreed to formally work together in order to prevent a no-deal Brexit.
Labour leader Jeremy Corbyn had previously called on parties opposed to a no-deal Brexit to support him in calling a vote of no-confidence in Boris Johnson’s government.
However, his suggestion that he would head a caretaker government met some resistance from some parties, most notably the Lib Dems.
But following talks between the parties involved Labour has agreed to first pursue legislative measures to block a no-deal Brexit, reserving the so-called nuclear options of a no-confidence vote until October.
A joint statement from the Labour Party, the SNP, the Liberal Democrats, Plaid Cymru, the Green Party and the Independent Group for Change read:
‘The attendees agreed that Boris Johnson has shown himself open to using anti-democratic means to force through no deal.
‘The attendees agreed on the urgency to act together to find practical ways to prevent No Deal, including the possibility of passing legislation and a vote of no confidence.’
Should they succeed in passing the legislation it’s expected we would see a strong uptick in Sterling in response, as markets welcome any moves that remove the risk of a no-deal Brexit.
South African Rand (ZAR) Rattled by Trade War Concerns
Meanwhile, the South African Rand (ZAR) slumped on Tuesday and faces the prospect of further losses throughout the week as a result of heightened trade tensions between the US and China.
Trade sentiment briefly improved earlier on in the week as Donald Trump claimed that China had been in contact with the US over potentially restarting trade negotiations.
However, Beijing officials have contradicted this claim, stating the only communication between the two powers has been at the ‘technical level’, scuppering hopes of reconciliation.
As a result it’s likely that the risk-sensitive Rand could struggle to pick up any support this week as relations between the two countries look likely to remain strained.