January 29, 2019 - Written by John Cameron
STORY LINK Pound Sterling South African Rand (GBP/ZAR) Exchange Rate Slips despite Labour Supporting ‘Cooper’ Amendment
Pound Sterling South African Rand (GBP/ZAR) Exchange Rate Slides despite Possibility of Article 50 Extension
With the focus firmly on politics today the Pound South African Rand (GBP/ZAR) exchange rate slipped over the course of the day, and is currently trading an inter-bank rate of R17.9540.
This has occurred despite the UK Labour Party confirming it will back the ‘Cooper’ amendment to Prime Minister Theresa May’s Brexit withdrawal agreement.
A party source stated:
‘We’re backing the Cooper amendment to reduce the threat of the chaos of a no-deal exit. The Cooper bill could give MPs a temporary window to agree a deal that can bring the country together.
‘We will aim to amend the Cooper bill to shorten the possible article 50 extension.’
However, Theresa May stated that ‘extending Article 50 does not rule out no-deal’ which likely dampened sentiment in the UK currency.
South African Rand (ZAR) Weighed Down by Increased Global Risk Sentiment
The risk-sensitive South African Rand suffered as a result of the fresh US-Sino tension that has continued this week.
News emerged this morning that the US Department of Justice had filed criminal charges against Chinese tech giant Huawei and its Chief Financial Officer, Meng Wanzhou, which threatens to undermine attempts by officials to restore relations.
The US has filed 23 charges, including theft of technology, bank fraud and the obstruction of justice, all of which Huawei has denied.
Former Singapore Foreign Minister, George Yeo suggested that the tensions between the US and China could continue ‘for the next 20 years’ as the relationship between the two is currently ‘oscillating between a cold war and a cold peace.’
Following this, the GBP/ZAR exchange rate slid before regaining momentum in the early hours of Tuesday morning.
GBP/ZAR Outlook: Will Brexit Anxieties Limit the Pound?
Tomorrow will see the release of the South African M3 money supply for December, which could help the Rand continue to push back against the Pound as the forecast suggests that the figure will increase by 5.78%.
December’s private sector credit figure for South Africa is also due for release on Wednesday, which could see the Rand slip against the Pound if the forecast of slightly slowed growth is correct.
Brexit is also likely to remain in the spotlight as, depending on the outcome of the votes tonight, there could be fluctuations in the pairing, with the Pound likely to benefit from any further suggestions that the UK will avoid a no-deal Brexit.
Also likely to cause movement in the pairing are the ongoing developments in US-China trade relations, with any indication that the relationship between the two powers is cooling meaning the risk-sensitive Rand could see an downswing in support.
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TAGS: Pound Rand Forecasts