GBP/ZAR Exchange Rate Falls as South African Economy Shows Signs of Improvement
The Pound South African Rand (GBP/ZAR) exchange rate is down by 0.5% today and is currently trading around R18.6816.
The South African Rand (ZAR) edged higher against the Pound (GBP) following the publication of the South African Consumer Price Index figures for February yesterday, which improved against January’s -0.20% to an encouraging 0.80%.
These were followed by the year-on-year CPI figures for February, which also increased above forecast.
The South African financial consultant, TresuryONE, commented that this may encourage the South African Reserve Bank (SARB) to hold its interest rates next week, buoying market conference in ZAR.
Today is Human Rights Day which is a bank holiday in South Africa, leaving many ZAR traders to focus on geopolitical developments instead.
Sterling, however, has plummeted against the South African Rand today following Prime Minister Theresa May’s televised statement last night, in which she once again urged MPS to back her deal, and insisted that a delay to Brexit would be shortened to 30 June.
Theresa May concluded her public statement, saying:
‘You want this stage of the Brexit process to be over and done with. I agree. I am on your side. It is now time for MPs to decide.’
Pound South African Rand (GBP/ZAR) Exchange Rate Sinks as No-Deal Fears Haunt UK Markets
The Pound is continuing to be weakened by fears of a no-deal Brexit, with the vote next week – which will determine the success of May’s withdrawal agreement – becoming a ‘make or break’ situation between the UK and the EU.
The President of the European Council, Donald Tusk, warned Parliament, saying:
‘In the light of the consultations that I have conducted over the past days I believe that a short extension will be possible but to be conditional on a positive vote on the withdrawal agreement in the House of Commons.’
Today, meanwhile, saw the publication of the UK retail sales figures for February which increased above the expected -0.4% to an encouraging 0.4%. Year-on-year retail sales for February also increased to a better-than-forecast 4.0%.
The Bank of England is also due to announce its interest rate decision today which is expected to hold steady at 0.75%. However, with Brexit news continuing to occupy the spotlight, this is expected to be overshadowed by further developments.
ZAR/GBP Exchange Rate Soars on Improving Chinese Economic Relations
The South African Rand has benefited from improving relations with its largest trading partner, China, following the electronics manufacturer, Hisense, investing up to US$5 million in the South African economy.
Today also saw the news that US-China trade talks were progressing, although President Donald Trump said that tariffs on Chinese imports would remain in place for a ‘substantial period of time.’
However, both Trump and many traders have remained optimistic that the two superpowers will come to a consensus in the coming weeks.
GBP/ZAR Forecast: South African Rand Could Rise on US-China Trade Consensus
There are no significant UK economic data releases until next week, with many Pound investors instead focusing on Brexit developments.
Any signs that MPs will be willing to back Theresa May’s withdrawal agreement ahead of next week’s vote, however, would prove Pound-positive.
South African Rand traders, meanwhile, will be paying close attention to trade talk developments between the US and China, and with any signs of an emerging consensus we could see the risk-averse ZAR/GBP exchange rate rise further.