Johnson-Merkel Phone Call Leaves Pound Sterling South African Rand (GBP/ZAR) Exchange Rate Flat

October 8, 2019 - Written by John Cameron

STORY LINK Johnson-Merkel Phone Call Leaves Pound Sterling South African Rand (GBP/ZAR) Exchange Rate Flat

Pound South African Rand (GBP/ZAR) Exchange Rate Muted as Brexit Negotiations Close to Breaking Down

The Pound Sterling South African Rand (GBP/ZAR) exchange rate was left muted and the pairing is currently trading at around R18.6303.

The Pound was left flat against the Rand following reports that negotiations between the UK and European Union were close to breaking down.

A Downing Street source revealed that after a call between German Chancellor Angela Merkel and Prime Minister Boris Johnson, a Brexit deal is ‘essentially impossible’.

Speaking about the proposals Johnson put forward to the EU, Merkel made it clear reaching a deal based upon these would be ‘overwhelmingly unlikely’.

Meanwhile, European Commission President Donald Tusk accused the Prime Minister of playing a blame game, and tweeted:

‘What’s at stake is not winning some stupid blame game. At stake is the future of Europe and the UK as well as the security and interests of our people. You don’t want a deal, you don’t want an extension, you don’t want to revoke, quo vadis?’

South African Rand (ZAR) Left Flat as US-China Relations Strained

The risk-sensitive South African Rand was left under pressure on Tuesday as risk-appetite decreased as US-China relations were left strained.

The likelihood that this week’s face-to-face talks between the US and China would result in a trade deal decreased as Washington blacklisted Chinese companies over alleged involvement in abuses against Muslim ethnic minorities.

Beijing responded angrily and dismissed these allegations and foreign secretary spokesman, Geng Shuang said:

‘There is no such thing as these so-called ‘human rights issues’ as claimed by the United States. These accusations are nothing more than an excuse for the United States to deliberately interfere in China’s internal affairs.’

US President Donald Trump also increased tension by warning that unless Beijing found a humane and peaceful resolution to the Hong Kong protests, there is potential for this to hurt trade discussions.

South African Rand (ZAR) Under Pressure as Risk-Appetite Slides

Geopolitical tensions in Turkey left the South African Rand under pressure as Turkey announced it was preparing a military operation in northeast Syria.

On Tuesday, Turkey said it completed preparations for a military operation after the US began pulling back troops, allowing for an attack on Washington’s allies and Kurdish-led forces.

However, US President Donald Trump warned that he would ‘obliterate’ the country’s economy if it took action in Syria as he considered the country ‘off limits’.

Pound South African Rand Outlook: Will Weak Business Confidence Weigh on ZAR?

Looking ahead, the South African Rand (ZAR) is likely to slide against the Pound (GBP) following the release of September’s SACCI business confidence.

If South African business confidence falls further than expected, Rand sentiment could slide.

Meanwhile, the Pound could be left under pressure if reports reveal that Brexit negotiations break down as expected.

If talks collapse, Sterling is likely to slide, causing the Pound South African Rand (GBP/ZAR) exchange rate to remain flat.

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