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Pound to South African Rand Exchange Rate Hits Monthly Worst on Risk and Central Bank Speculation

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Pound to South African Rand Exchange Rate Fails to Hold Ground despite Brexit Hopes

Despite this week’s Pound (GBP) strength, the Pound Sterling to South African Rand (GBP/ZAR) exchange rate has still slipped. The South African Rand (ZAR) has been even stronger than the Pound due to economic hopes and higher market risk-sentiment.

Since opening this week at the level of 18.18, GBP/ZAR has seen volatile movement but has generally trended with a downside bias.

After a brief dip in Rand demand yesterday, the trade-correlated currency has resumed this week’s bullish streak. At the time of writing on Thursday, GBP/ZAR was trending close to a low of 18.00. This was the worst level for the pair since the 5th of August.

The Rand has been one of this week’s most appealing currencies due to a number of both domestic and global factors.

Pound (GBP) Exchange Rates Cool Off after Days of Sturdy Performance

While the Pound has been unable to sustain gains against a stronger South African Rand, the British currency’s performance has been fairly strong overall this week.

Sterling has been stronger since Monday, when the latest UK growth report beat forecasts and doused fears that Britain was headed for an imminent recession.

Hopes that Britain could avoid a no-deal Brexit have also risen.

UK Parliament successfully passed a bill to prevent a no-deal Brexit, and despite rumours that the government could still attempt to force one MPs are reportedly making efforts to reach a consensus on a softer outcome.

Yesterday, further pressure was put on the government as the highest court in Scotland ruled its long prorogation of parliament to be unlawful.

Sterling slipped today after performing strongly through yesterday, which made it easier for a stronger South African Rand to push GBP/ZAR lower.

South African Rand (ZAR) Exchange Rates Bolstered by Domestic and Global Factors

The South African Rand has been one of this week’s most appealing major currencies, as investors react to the latest shifts in domestic and geopolitical outlooks.

Perhaps the most significant support came as credit ratings agency Moody’s indicated it was not likely to cut South Africa’s credit rating to junk status within the near future. This has been the primary cause of ZAR gains this week.

The trade-correlated Rand has also found support in global geopolitical developments though.

Market risk-sentiment has risen on hopes that China will inject fresh stimulus into its economy. Speculation that the European Central Bank (ECB) will introduce a comprehensive easing package today is bolstering trade-correlated currencies like the Rand.

On top of ECB speculation, fresh bets that the South African Reserve Bank (SARB) will not cut South African interest rates again until 2020 also supported the Rand.

Pound to South African Rand (GBP/ZAR) Exchange Rate Awaits Geopolitical and Central Bank Developments

The rest of the week’s UK and South African economic calendars are quiet, leaving the Pound to South African Rand (GBP/ZAR) exchange rate to react to developments in politics and other global factors.

Pound investors remain focused on UK political uncertainty and Brexit. If there are any surprising Brexit developments before the end of the week, the Pound could still see a notable shift in movement.

The South African Rand, on the other hand, will be influenced by global shifts in risk and trade-sentiment. This in turn could be influenced by many things.

If the European Central Bank (ECB) is more dovish than expected today, investors will be more willing to buy high yielding currencies correlated to trade and risk, like the South African Rand.

If US-China trade relations improve, this would have the same effect.

Looking ahead to next week, South African and UK inflation stats will be published on Wednesday, with retail sales results due for publication as well.

These could influence more domestic economic and central bank outlooks and could drive the Pound to South African Rand (GBP/ZAR) exchange rate.