Pound to South African Rand Exchange Rate Slides ahead of South African Reserve Bank
While still holding above the three month lows seen last week, the Pound Sterling to South African Rand (GBP/ZAR) exchange rate has tumbled this morning. Fresh concerns about how the Brexit process will turn out and anxiety ahead of tomorrow’s news left the pair lower.
GBP/ZAR has been falling since the month began. While last week’s losses were less significant, GBP/ZAR still slipped from 18.40 to 18.32 throughout and briefly touched on a three-month-low of 18.10 last Thursday.
This week’s movement has been more subdued. GBP/ZAR fluctuated within a relatively tight range until today, but the pair tumbled again and trended closer to the level of 18.20 at the time of writing.
The latest weakness in the Pound (GBP) was due to doubts that UK Prime Minister Theresa May’s offer for a ‘new’ Brexit deal would be popular enough to pass through Parliament.
Pound (GBP) Exchange Rates Tumble as No-Deal Brexit Fears Continue to Revive
Since cross-party Brexit negotiations collapsed last week, the Pound (GBP) has been especially unappealing as investors become more concerned that the time wasted on these talks worsens the chances of a worst-case scenario no-deal Brexit.
No-deal Brexit fears have only been worsened by concerns that the new populist Brexit Party could perform well in tomorrow’s EU elections, and that a hard Brexit supporting leader could succeed UK Prime Minister Theresa May.
Prime Minister Theresa May proposed a ‘new’ Brexit plan yesterday in hopes it would get the opposition on board, but this only offered temporary support to the Brexit-battered Pound.
The plan included intent to use new technology to resolve the issue of the Irish backstop, as well as giving Parliament the possibility to vote on whether or not to hold a second referendum.
However, amid quick criticism from within Prime Minister May’s own cabinet, and then criticism from the opposition Labour Party she hoped to get on side, market hopes for the deal quickly dissipated and the Pound slumped this morning.
The Pound saw little movement in reaction to today’s UK inflation data, as Brexit uncertainty continued to dominate the outlook for the British currency.
South African Rand (ZAR) Exchange Rates Steady Ahead of South African Reserve Bank (SARB)
The Pound to South African Rand (GBP/ZAR) exchange rate’s losses today were due largely to weakness in the Pound, but the South African Rand (ZAR) has been fairly steady this week so far which has helped the currency to sustain gains.
This week so far, US-China trade war fears have cooled a little leading some investors to return to currencies correlated to risk and trade, like the South African Rand.
Uncertainty over the tensions persists though, keeping a lid on the Rand’s appeal.
Still, investors are hesitant to move too much on the Rand ahead of tomorrow, when the South African Reserve Bank (SARB) will hold its May policy decision.
As a result of this anticipation and focus on global trade uncertainties, today’s underwhelming South African inflation report had little impact on the South African Rand.
Pound to South African Rand (GBP/ZAR) Exchange Rate Awaits Political and Central Bank News
A multitude of factors have the potential to drive the Pound to South African Rand (GBP/ZAR) exchange rate for the remainder of the week, as well as the outlooks for the currencies going forward.
Thursday could be a particularly major session, with the EU elections likely to influence outlooks for the Pound and the Brexit process, while South African Rand investors will focus on the South African Reserve Bank (SARB) monetary policy decision.
Results of the EU elections will come in through Sunday, and market reaction to how well the ruling Conservative Party and new populist Brexit Party performed will be particularly influential.
If the Conservative Party performs even worse than expected, market fears of a disorderly Brexit could worsen and the Pound outlook will weaken.
The South African Rand could shore up some of its recent resilience if the South African Reserve Bank’s tone on the South African economy appears more hawkish following the recent South African election.
US-China trade developments will continue to influence the Rand’s support and the Pound to South African Rand (GBP/ZAR) exchange rate through coming sessions as well.