The Pound has advanced against a weakened South African Rand recently, seeing a gain of 0.9%. This strong advance has come from continued instability in South Africa, as well as a recent surge in UK optimism about Brexit.
Pound Rally Possible if UK Secures Good Brexit Trade Deal
After slumping in the wake of poor PMI figures, the Pound has since rallied thanks to rising hopes of a Brexit trade deal.
This optimism has mainly come after comments from former Bank of England (BoE) official Andrew Bailey, who was speaking at a Reuters event.
Offering a ray of hope to those fearing a turbulent Brexit process, Bailey stated that;
‘Some of the commentary on Brexit suggests that it must inevitably lead to restrictions on trade, restrictions on the location of activity in financial services and therefore restrictions on open markets.
The question that I want to address is whether restricting trade is an inevitable or indeed necessary response to Brexit and in the interests of anyone. I hope you’ll not be surprised that my answer to these questions is “no, it is not”’.
This hopeful statement comes after a less accommodating announcement from the EU’s Michel Barnier, who has warned that Brexit will not allow the UK to have frictionless trade.
Brexit talks are still in their early stages, so the Pound still has a chance to rally if it looks like a good deal could still be on the cards.
Further Rand Drops Possible on Signs of Zuma Persistence
As usual, President Jacob Zuma remains a strong influencer on the South African Rand. At present, efforts are ongoing to secure a secret vote of no confidence against Zuma.
In another potential blow to these efforts, Zuma has called for the African National Congress (ANC), his party, to cease its internal ‘war’.
Despite hundreds of corruption allegations and repeated attempts to have him deposed, Zuma has proven an immovable object at the head of the nation.
If it looks like his departure is still a long way off due to residual ANC support, the South African Rand could remain in a continually weak position against the Pound.
Recent Interbank GBP ZAR Exchange Rates
At the time of writing, the Pound to Rand (GBP ZAR) exchange rate was trading at 17.4502 and the Rand to Pound (ZAR GBP) exchange rate was trading at 0.0572.