The Pound has recently made a 0.5% gain against the South African Rand, which puts the GBP ZAR exchange rate near the best in a month.
Sterling could advance further against the Rand in the future, if recent forecasts about the Bank of England (BoE) prove accurate.
Pound Rally Predicted if BoE goes ahead with UK Interest Rate Hike
The GBP ZAR exchange rate has fluctuated wildly recently, following a series of contrasting announcements from Bank of England (BoE) officials.
Previously, BoE Governor Mark Carney has spoken against raising UK interest rates, while Andy Haldane, a historically cautious figure, has advocated the opposite.
Now, with Carney (seemingly) supporting a UK interest rate hike, the Pound has surged on the prospect.
For some time, the earliest expected UK interest rate hike has been in 2019. If the BoE does defy longstanding expectations and raise UK interest rates in 2017 then the Pound could soar to historic highs against the Rand.
Future Rand Movement Still Tied to President Zuma’s Position
The future value of the South African Rand is still closely linked to political events.
In the ongoing struggle to oust controversial President Jacob Zuma, efforts have ground to a halt.
African National Congress (ANC) Assembly Speaker Baleka Mbete still has yet to decide whether she will allow or deny a secret vote of no confidence against Zuma.
Mbete’s delay is understandable – as an ANC member, she could find herself out of a job if Zuma, the ANC’s leader, is removed from power by granting a secret ballot.
On the other hand, Mbete has to consider the numerous corruption allegations levelled against Zuma, as well as the impact of his questionable decisions on the South African economy.
Offering a forecast on the catch-22 situation has been Susan Booysen of the Wits’ School of Governance;
‘It is certainly a possibility that President Zuma may be recalled in the near future. We know change is happening in the ANC, but we do not know how fast or how deep. December’s national elective conference will be a pivotal point in which we will know much more about the balance of forces in the ANC’.
If Mbete’s does choose the nuclear option and approve a secret vote then the tide could turn against Zuma. His deposal in a secret vote would spark turbulence in South Africa, but could trigger a near-term rise for the Rand due to hope for the future.
Recent Interbank GBP ZAR Exchange Rates
At the time of writing, the Pound to South African Rand (GBP ZAR) exchange rate was trading at 16.8470 and the South African Rand to Pound (ZAR GBP) exchange rate was trading at 0.0593.
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