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Pound South African Rand (GBP/ZAR) Exchange Rate Steady, US-China Trade Hopes Return

GBP/ZAR Exchange Rate Held Steady on ‘Cautious Optimism’ for US-China Trade Deal

The Pound South African Rand (GBP/ZAR) exchange rate held steady today, with the pairing currently trading around R18.709 after optimism over US-China trade talks, which are taking place in Washington, boosted risk-appetite for the South African currency.

Liu He, China’s Vice Premier, commented:

‘The Chinese side came with great sincerity, willing to cooperate with the US on the trade balance, market access and investor protection.’

With China being one of South Africa’s largest trading partners, this has buoyed confidence in the risk-sensitive South African Rand.

Analysts at NKC African Economics commented:

‘The South African rand rode the wave of cautious optimism as markets assessed U.S.-Sino trade talk uncertainty to have lifted somewhat, although mixed signals from the economic powerhouses kept risk bulls at bay. Washington and Beijing may agree to a ‘partial’ trade deal, which lifted trade- and risk-sensitive currencies.’

GBP/ZAR Exchange Rate Rangebound, UK-EU Brexit Deal Hopes Increase

The Pound (GBP) failed to make any significant gains on the South African Rand today despite renewed Brexit optimism, with Donald Tusk, the President of the European Council, commenting that he had ‘received promising signals that  Brexit deal is possible’.

This follows yesterday’s unexpected “constructive” meeting between Irish Taoiseach Leo Varadkar and Prime Minister Boris Johnson, which were concluded with a joint-statement of a possible “pathway” to a new Brexit agreement.

Optimism over a possible UK-EU Brexit deal has provided some uplift for Sterling today, but markets remain cautious with Donald Tusk’s urgency, saying that a new deal must be offered today or there would be ‘no more chances’.

Mr Tusk added:

‘Unfortunately we are still in a situation in which the UK has not come forward with a workable realistic proposal. Of course, there is no guarantee of success and the time is practically up, but even the slightest chance must be used. A no-deal Brexit will never be the choice of the EU.’

With no UK economic data due out until next week, the GBP/ZAR exchange rate will be driven by Brexit developments today. Any signs of Boris Johnson securing a workable Brexit alternative could, however, further boost market confidence in the Pound.

GBP/ZAR Outlook: Could the Pound Rise on a UK-EU Brexit Deal?

Sterling traders will be looking ahead to August’s ILO unemployment rate, which is expected to increase from 3.8% to 3.9%.

Tuesday will also see the release of August’s UK average earnings figure, with forecasts expecting an improvement of 3.9%.

Meanwhile, ZAR traders will be looking ahead to Wednesday’s release of August’s South African retail sales, which are expected to rise from 2% to 2.6%.

Brexit developments will remain in the driving seat for the GBP/ZAR exchange rate next week, with any further indications of a possible Brexit deal between the UK and the EU further boosting market optimism in the Pound.