Pound South African Rand (GBP/ZAR) Exchange Rate Sinks as Risk Appetite Rises on US-China Trade Talks

April 29, 2019 - Written by John Cameron

STORY LINK Pound South African Rand (GBP/ZAR) Exchange Rate Sinks as Risk Appetite Rises on US-China Trade Talks

GBP/ZAR Exchange Rate Falls as US-China Trade Talks Increase Risk-Appetite

The Pound South African Rand (GBP/ZAR) exchange rate is down today and currently trading around R18.5247 on the inter-bank market.

The South African Rand (ZAR) exchange rate edged higher against the Pound (GBP) today as US-China trade talks are set once again to heat up, providing ZAR with some much-needed uplift on restored risk appetite.

This followed comments from the US Treasury Secretary, Steven Mnuchin, who said:

‘There are still some important issues. We still have more work to do. If we get to a completed agreement it will have real enforcement provisions [which are] close to done [and require] a bit of fine tuning.’

Many ZAR analysts are, however, remaining cautious ahead of South Africa’s national elections, which are just nine days away.

Tsitsi Hatendi-Matika, the Head of Retail Investment at Absa’s Wealth and Investment Management, was optimistic, however, that the South African Rand could possibly increase following the elections.

Returning confidence in the South African economy has provided uplift for the GBP/ZAR exchange rate today.

The Pound (GBP) meanwhile has weakened due to ongoing Brexit uncertainty today, with the Conservative party coming under increasing pressure ahead of the local elections due to a sense of ‘Brexit betrayal’.

GBP/ZAR Exchange Rate Slips as Labour Urged to Include Second-Referendum Option

Sterling is further buckling under increased tensions within the Labour party, which is now focusing on the inclusion of a second-referendum option in its European election manifesto.

Labour MPs Peter Kyle and Phil Wilson have pushed ahead to include the confirmatory referendum in a joint letter.

The MPs state:

‘The public wants Brexit to be over. They are looking to the Labour party to resolve this Brexit crisis. The way to resolve this crisis is in a confirmatory ballot with the facts of the deal before the British people.’

Today, meanwhile, saw a speech by the Governor of the Bank of England, Mark Carney, who skirted comments on monetary policy and instead focused on fintech developments, and thus providing little movement for Sterling.

Brexit continues to weigh on sentiment in the Pound, with today’s news that Theresa May will effectively delay the Queen’s speech until Brexit is more clearly delivered.

However, with uncertainty surrounding May’s deal ramping up after last week’s lack of any notable developments, this is hindering the Pound from making any significant gains.

GBP/ZAR Forecast: Sterling Could Rise on Cross-Party Brexit Consensus

Pound traders will be looking ahead to tomorrow’s printing of the UK GfK consumer confidence figures for April.

Meanwhile, as China is South Africa’s closest trading partner, tomorrow’s Chinese manufacturing PMI figures are likely to impact the South African Rand.

Tomorrow will also see the publication of South Africa’s trade balance figures for March, and with any signs of improvement, this could see the ZAR/GBP exchange rate increase further.

The GBP/ZAR exchange rate will likely be dictated by any signs of a breakthrough in cross-party talks over Brexit, and any indications that a consensus could emerge between the two parties would prove beneficial for the Pound.

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TAGS: Pound Rand Forecasts