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Pound to South African Rand Exchange Rate Investors Awaiting Central Bank and Trade Developments

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Pound to South African Rand Exchange Rate Fluctuates as Boris Johnson Meets with Emmanuel Macron

The Pound to South African Rand (GBP/ZAR) exchange rate has been fluctuating since its tumble yesterday, and amid a lack of notable ecostats due for publication in the coming days investors are awaiting potential political and central bank news.

After opening this week at the level of 18.59, GBP/ZAR briefly jumped to a 2-month-high of 18.79 before slipping as the South African Rand (ZAR) rebounded from lows.

Yesterday GBP/ZAR slumped as the Rand took advantage of the Pound’s (GBP) latest Brexit jitters, and this morning the pair touched on a weekly low of 18.39.

At the time of writing though, GBP/ZAR was trending near the level of 18.48 as markets awaited notable Brexit or central bank news.

Pound (GBP) Exchange Rates Mixed as UK Prime Minister Meets French President

The Pound steadied slightly today following its tumble against the South African Rand yesterday, despite anxiety regarding upcoming Brexit talks between UK Prime Minister Boris Johnson and French President Emmanuel Macron.

Macron has been opposed to the constant delays in the Brexit process, criticising Britain for prolonging the uncertainty.

The Pound’s rebound had little to do with Brexit optimism, and talks between Johnson and Macron are not expected to offer much hope for a softer Brexit or a delay to the process.

According to Christian Lequesne, Professor at Sciences Po in Paris:

‘It appears to be in Johnson’s interest to say that a no-deal exit would be the responsibility of the Europeans, and the French in particular, for not accepting his conditions,

But on the French side, Macron’s line will be to say a no-deal exit is nothing to do with the Europeans, who have done everything to try to have an arrangement.’

South African Rand (ZAR) Exchange Rates Hold Gains Following Lower Inflation Rate

The South African Rand rebounded strongly from near its worst levels yesterday, finding some additional support in South Africa’s latest inflation report.

South Africa’s Consumer Price Index (CPI) inflation rate was forecast to slow slightly to 4.4% year-on-year, but instead slowed to just 4.0%. The core inflation rate was also lower than forecast, at 4.2%.

The data prompted analysts to speculate that the South African Reserve Bank (SARB) could cut South African interest rates twice more, before the end of 2020.

However, despite this the Rand actually benefitted from the data, because South Africa’s interest rates remain high overall.

As South Africa’s inflation slows but interest rates remain high for the time being, the South African Rand’s yield attraction was high. The data also slightly eased fears about South African economic growth.

Pound to South African Rand (GBP/ZAR) Exchange Rate Investors Awaiting Central Bank and Trade News

With next week’s UK and South African economic calendars looking fairly quiet as well, Pound to South African Rand (GBP/ZAR) exchange rate investors will be carefully watching developments in more global factors.

The Central Bank Symposium at Jackson Hole will be held over the coming days. If any of the news from the event impacts the Bank of England (BoE) or South African Reserve Bank (SARB) outlooks at all, this could cause GBP/ZAR movement.

As a currency that is often correlated to trade news and shifts in global risk-sentiment, the South African Rand (ZAR) may also be inspired by potential developments in the US-China trade war.

With UK Prime Minister Boris Johnson set to meet with EU officials over the weekend, possible Brexit developments are most likely to drive Sterling movement.

As the Rand remains pressured by South African economic uncertainties, any optimistic Brexit developments could help the Pound to South African Rand (GBP/ZAR) exchange rate to climb back towards its highs.