Pound South African Rand (GBP/ZAR) Exchange Rate Falls as PM Faces New Rebellion
The Pound Sterling South African Rand (GBP/ZAR) exchange rate fell over the course of the morning, and is currently trading at an inter-bank rate of R18.23.
The Pound has been trading generally lower as news emerged that Prime Minister Theresa May is facing a new threat of rebellion from Conservative MPs.
It is said that more than 30 MPs may rebel in order to prevent a no-deal Brexit.
South African Rand (ZAR) Strengthens as Moody’s Maintains Investment Grade above ‘Junk Status’
The Rand, meanwhile, has strengthened at the end of this week’s session following Moody’s decision to maintain an investment grade on South Africa above ‘junk status’.
Moody’s signaled the nation’s spending plans did not weaken its policy credibility, which boosted the South African Rand.
However, this week’s SA budget painted a rather dismal picture, as Lucie Villa, Senior Credit Management said:
‘This budget highlights the government’s limited fiscal flexibility amid a challenging economic environment. The budget shows a further erosion in fiscal strength after the October medium-term budget policy statement already pointed to wider deficits for longer.’
Yesterday: Pound (GBP) Slides despite Record Surplus for UK Public Finances
The Pound’s losses today come in spite of UK public finances hitting a record surplus of £14.9B in January due to a surge in income tax payments.
This was the strongest January since records began in 1993.
However, demand for the Pound was dampened by comments from President of the European Commission, Jean-Claude Juncker.
‘If no deal were to happen, and I cannot exclude this, this would have terrible economic and social consequences in Britain and on the continent, so my efforts are oriented in a way that the worst can be avoided. But I am not very optimistic when it comes to this issue.
‘Because in the British Parliament every time they are voting, there is a majority against something, there is no majority in favour of something.’
GBP/ZAR Outlook: Will Brexit Optimism Buoy Sterling?
Looking ahead, as there is an absence of further South African and UK economic data, Brexit will likely remain the main catalyst for the GBP/ZAR pairing heading in to the weekend.
If there appears to be significant progress made in Brussels, it could see an upswing of support for the Pound.
Next Tuesday PM Theresa May is due to give a speech which could see the Pound slide if she suggests – as EC President Juncker has – that the likelihood of a no-deal Brexit has increased.