Currency News

Daily Exchange Rate Forecasts & Currency News

Pound South African Rand (GBP/ZAR) Exchange Rate Dips Following SA Election

May 9, 2019 - Written by John Cameron

South African Rand (ZAR) Buoyed Following General Election



The South African Rand (ZAR) ticked higher against the Pound (GBP) on Thursday as the dust settled on South Africa’s 2019 elections.

While votes are still be counted, with full resulted expected on Saturday, early counts put the ruling ANC party on track to win about 56% of the vote, a slide from the 62% it claimed in the 2014 election.

However this still leaves it well ahead of its closes opposition, the Democratic Alliance who look to claim around 25% of the vote.

RMB analyst Nema Ramkhelawan-Bhana suggests:

‘It’s too early to tell how the domestic market has interpreted the initial results. The Rand’s apparent outperformance against a basket of EM currencies, despite concerns over the fluidity of US-Sino trade talks, could be reinforced if the consensus expectation for the ruling party plays out and the ANC secures 57 percent-58.5 percent of the national vote.’

Having held power since apartheid ended in 1994, the ANC has been plagued by corruption scandals in recent years, something that has greatly eroded support for the party.

ZAR investors will be hopeful that this week’s election victory will be a turning point for the ANC, and allow President Cyril Ramaphosa to embark on an ambitious programme to stimulate South Africa’s ailing economy.

Pound (GBP) Muted as Political Uncertainties Weigh



Meanwhile movement in the Pound (GBP) remains limited today as Brexit and political uncertainty in the UK continues to dampen appetite for Sterling.

This comes as cross-party talks between the government and Labour continue to stall, with Labour Leader Jeremy Corbyn suggesting that it is difficult negotiating with a ‘disintegrating government’.

Markets have grown increasingly frustrated by the lack of progress in cross-party talks, with no signs that either side has been willing to compromise with one another.

This has not been helped by the launch of Labour’s EU election campaign today either, with the party continuing to make its position on Brexit vague.

Corbyn at the launch: ‘It’s said that Labour is trying to offer something to everyone over Brexit. I make no apology for that.

‘Labour will never be the party of the 52 per cent or of the 48 per cent. We are the part of the great majority who reject the politics of smear and scapegoating.’

This will disappoint GBP investors who were hoping for the party to offer some greater clarity on whether it would support a second referendum, with the manifesto only including the ‘option of a public vote’ if a ‘sensible’ Brexit deal is not agreed or a general election not called.

GBP/ZAR Exchange Rate Forecast: Will a Jump in UK GDP Prompt Sterling to Rally?



Looking ahead, the Pound South African Rand (GBP/ZAR) exchange rate may seek to rally at the end of this week’s session, following the preliminary reading for UK growth in the first quarter of 2019.

Economists forecast that Friday’s GDP print will report that domestic growth surged from 0.2% to 0.5% through the first three months of the year, likely helping the Pound to rally from the week’s lows.

However, any gains in Sterling could be tempered somewhat by the accompanying investment report, with analysts expecting domestic business investment to have continued to contract as ongoing Brexit uncertainty weakened confidence in the UK.

Meanwhile, with South Africa having exhausted its data for week, the focus for ZAR investors is likely to be on the US-China trade talks currently underway in Washington.

This could result in some heavy losses in the Rand in the tail end of the week, with the emerging market currency likely to shunned by markets if the talks fail to prevent the US from hike tariffs on Chinese exports from 10% to 25%, sparking fears of a full-blown trade war between the US and China.

Like this piece? Please share with your friends and colleagues:

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.


TAGS: Pound Rand Forecasts

Comments are currrently disabled