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Pound South African Rand (GBP/ZAR) Exchange Rate Climbs as SA Traders Await Growth Initiatives

May 17, 2019 - Written by John Cameron

GBP/ZAR Exchange Rate Rises on SA Economic Uncertainty

The Pound South African Rand (GBP/ZAR) exchange rate edged higher today and is currently trading around R18.3198 on the inter-bank market.

The South African Rand (ZAR) has weakened against the Pound (GBP) this week on a lack of economic data following the disappointing South African retail sales figures for March on Wednesday, which fell below forecast.

However, political developments have remained in focus following South Africa’s President Cyril Ramaphosa retaining solid ground after last week’s general elections.

Many ZAR traders, however, are remaining anxious ahead of next week’s announcement form the cabinet.

Nema Ramkhelawan-Bhana, an Analyst at RMB, commented:

‘Much depends on [South Africa’s] political construct and the all-important cabinet announcement next week, which will determine whether growth-enhancing policies and structural reform are in fact achievable over the next five years.’

The South African Rand is also struggling from a lack of risk appetite, as the US and China continue exacerbating trade tensions.

GBP/ZAR Exchange Rate Edges Higher despite Cross-Party Brexit Talk Breakdown

The Pound, however, has been performing badly against many of its major competitors today, following Jeremy Corbyn, the leader of the Labour party, said that cross-party talks with the Conservatives had ‘gone as far as they can’.

Prime Minister Theresa May also stated the breaking in the talks, saying:

‘[W]e haven’t been able to overcome the fact that there isn’t a common position in Labour about whether they want to deliver Brexit or have a second referendum and try to reverse it.’

As cross-party talks are continuing to break down, many Sterling traders are feeling jittery ahead of June’s vote on Theresa May’s withdrawal agreement, as a parliamentary consensus seems ever more distant.

Theresa May’s leadership has also come under question from both the 1922 Committee, and former Foreign Secretary, Boris Johnson, who was eager to take up the leadership role following yesterday’s comments.

Tory MP Philip Lee, however, was critical of pushes for May’s resignation, saying:

‘Forcing the PM's resignation and spending this summer locked in a leadership election where candidates trade ever more fantastic visions of unicorn Brexits … is neither in the interests of the Conservative Party nor of the United Kingdom.’

GBP/ZAR Outlook: Brexit Developments to Remain in Focus

Pound investors will be looking ahead to Tuesday next week for the inflation report hearings, and with any positive news about the UK’s economy, this could prove Sterling-positive.

South African Rand traders, meanwhile, will be paying close attention to political and economic developments, with hopes set on growth-enhancing policy changes from President Cyril Ramaphosa.

The Pound South African Rand (GBP/ZAR) exchange rate will most likely be directed by political developments into next week, and with cross-party talks having broken down, it is likely that Sterling will weaken on heightening Brexit uncertainty.

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