Thanks to optimism about a UK-US trade deal, the Pound has risen by almost 1% against the South African Rand to a rate of 16.9106. This has been a slight recovery, but not up to the level of July’s pairing high of 17.5508.
Pound Sterling Forecast: Success in US Trade Talks could Strengthen GBP
Looking ahead, the Pound could make further gains against the Rand if good news comes out of the US.
Recent GBP gains have been triggered by the news that Trade Secretary Liam Fox is meeting with his US counterpart in Washington.
The two are due to discuss the possibility of a UK-US trade deal starting after the UK leaves the EU.
While these are only extremely preliminary talks on the matter, signs of an early agreement could still embolden GBP traders and trigger a rally.
Rand Outlook: Zuma Ejection in August could Trigger Major Rally
As is often the case for South African forecasts, the Rand may be moved in the near-term by news about Jacob Zuma. The country’s controversial President faces yet another challenge to his leadership on August 8th, in the form of a vote of no confidence.
Whether this vote is public or ‘secret’ has yet to be decided; if the latter version is decided on, the stakes could be considerably higher.
If National Assembly Speaker Baleka Mbete approves a secret ballot, then Zuma faces a real chance of being forced out of power. The historically-controversial President has been in power since 2007 and is due to step down as African National Congress (ANC) leader in December this year. Despite this, he will stay on as President until 2019, unless removed before then.
In August, expulsion via a vote of no confidence could trigger high Rand volatility. Given the unprecedented nature of the event, the Rand could initially crash but may then appreciate sharply on confidence in the new administration.
That said, the odds remain in Zuma’s favour to survive a public or private vote on his leadership. Analysing the situation has been John Steenhuisen, Chief Whip of the Democratic Alliance (DA).
The DA are staunch rivals of Zuma’s African National Congress (ANC), but Steenhuisen is not hopeful about a full rejection in August;
‘I’m not optimistic at all that the ANC will vote Zuma out, secret ballot or no secret ballot. I do think there will be breakaways, abstentions, failures to pitch on the day and maybe one or two votes against Zuma. That would be a major loss for Zuma and the ANC’.
Recent Interbank GBP ZAR Exchange Rates
At the time of writing, the Pound to Rand (GBP ZAR) exchange rate was trading at 16.8904 and the Rand to Pound (ZAR GBP) exchange rate was trading at 0.0591.