GBP/ZAR Exchange Rate Sinks as US-China Trade Talks Set to Go Ahead ‘Very Shortly’
The Pound South African Rand (GBP/ZAR) exchange rate eased to R18.781 this morning, with the lull in South African domestic political developments offsetting US-China trade tensions.
US President Donald Trump helped to improve risk appetite in the South African Rand following comments that the US and China would return to trade negotiations ‘very shortly’.
Mr Trump said on Monday:
‘China called last night… said let’s get back to the table. So we’ll be getting back to the table. We’re going to start very shortly to negotiate… but I think we’re going to make a deal.’
However, these comments were contradicted by Geng Shuang, the Chinese Foreign Ministry spokesman, who said that had not heard about such calls.
Mr Shuang said:
‘China and the US should resolve their trade disputes through dialogue. We have had 12 rounds of high-level consultations, and working teams from the two sides are keeping in touch. Regretfully the US has announced its decision to add new tariffs on Chinese products. Such maximum pressure will hurt both sides and is not constructive at all.’
As a result, South African Rand traders are remaining cautious today, as the focus remains on US-China trade developments.
GBP/ZAR Exchange Rate Sinks as Brexit Uncertainty Rises ahead of Deadline
The Pound has steadied against many of its competitors this morning after yesterday’s increased cross-party opposition to a no-deal Brexit.
This follows Labour leader Jeremy Corbyn’s prioritising of legislation to prevent a disorderly exit in October. Mr Corbyn said:
‘[I will] propose the parliamentary process which would mean the legislation can be laid.’
Meanwhile, Chancellor of the Exchequer, Sajid Javid, is due to hold a fast-tracked spending review when MPs return to Parliament next week.
As a result, this has fuelled speculation over the possibility of an early General Election.
Shadow Chancellor John McDonnell commented:
‘Nobody is fooled into believing that this is a proper and normal spending review. It’s a one off pre-election panic driven stunt budget.’
However, Sterling has weakened today following heightened Brexit uncertainty as the Conservative Government is due to ask the Queen to suspend Parliament just weeks before the Brexit deadline.
GBP/ZAR Outlook: Brexit Developments to Remain in Focus
South African Rand traders will be looking ahead to tomorrow’s publication of the South African Producer Price Index for July.
These are expected to ease from 0.40% to 0.15%, while year-on-year figures are also expected to ease.
Meanwhile, Sterling traders will be looking ahead to Friday’s publication of the UK GfK consumer confidence figure for August.
As this is expected to ease from -11 to -12, we could see the GBP/ZAR exchange rate sink further.
The Pound South African Rand exchange rate will likely remain subdued on Brexit uncertainty for the rest of the week, however, as controversies are likely to flare up around the Government’s appeal to the Monarchy over Brexit.