The Pound to Rand (GBP/ZAR) exchange rate has improved notably on Tuesday afternoon, with Sterling rising by 1.1% in the pairing.
This rise to the region of 16.9096 comes as analysts worry about the divide between South African ANC President Cyril Ramaphosa and national President Jacob Zuma.
Momentum Investments economist Sanisha Packirisamy has warned that the nation could stagnate under ‘policy paralysis’, if the two sides pull in opposite directions.
(First published January 2nd, 2018)
The Pound to South African Rand exchange rate (GBP/ZAR) has been tight today, but Sterling could still rally if upcoming Brexit talks get off on a good footing.
Pound to South African Rand Rally possible on Early Progress in Brexit Talks
The Pound has dipped against the South African Rand today, as traders consider the chances of rapid progress in phase two of Brexit talks.
The UK government was eventually granted permission to move from phase one to phase two late last year, following weeks of frantic deal-making.
There is currently cautious optimism that the UK could reach an agreement with the EU before October 2018, at which point official negotiations are expected to conclude.
Phase two discussions will focus on the length and conditions of a transitional deal, in addition to what kind of post-Brexit trade the UK can expect.
UK negotiators have long sought to broker a trade agreement with the EU since the start of talks, but were previously blocked by the need to finish phase one talks.
If the UK team hits the ground running in starting up talks this year, the Pound could make substantial gains against the South African Rand.
Consistency is the key here, as traders will be looking for signs that the UK is actually making progress in talks, instead of stalling for months as was seen in 2017.
South African Rand to Pound Rate Rises after ANC Veterans Back Ramaphosa
The Rand to Pound exchange rate has risen marginally today, following a show of support for new African National Congress (ANC) leader Cyril Ramaphosa.
Mr Ramaphosa was elected as ANC President in late December, with some hoping that he will soon replace national President Jacob Zuma, a historically controversial figure.
In the Rand’s favour, senior figures from the ANC leadership have issued a supportive joint letter to Ramaphosa, stating;
‘We hope it will be a breath of fresh air that we as a nation will gladly breathe. It will not be an easy road, given the present challenges our movement faces.
Real party unity can only be built on our historic principles, values, and integrity as expounded and practiced by [former President] Oliver Tambo’.
These influential figures have additionally added that;
‘The perception of corruption and criminality in the [national] presidency will not, and should not be wished away.
A starting point and a clear message to the country, would be for our country’s president to voluntarily step down in the interests of country and the African National Congress.
If [President Zuma] really loves the ANC he would assist it by handing over the leadership of the country to [Ramaphosa] to better prepare for the 2019 elections’.
If Zuma does step down in the coming months, the Rand could rise to historic highs against the Pound and its other regular currency rivals.