The Pound to South African Rand (GBP/ZAR) exchange rate is trending slightly lower in Tuesday’s European session after political upheaval yesterday.
South African Rand Drops on Nene’s Request ahead of Moody’s Rating
The Rand weakened significantly on Monday, trading over 1.0% lower against the US Dollar (ZAR/USD) after a newspaper report. South African Finance Minister Nhlanhla Nene reportedly asked President Cyril Ramaphosa to sack him. The move comes following Nene’s testimony in a corruption enquiry, which he feels may negatively impact economic confidence should he remain in his role.
Other factors have also been influencing the South African Rand’s value, including a stronger US Dollar, fears over China’s economic expansion, and the potential for instability in the Eurozone.
South African Business Confidence data will make its way onto markets on Wednesday. Manufacturing Production and Mining Production numbers will follow on Thursday, before Consumer Confidence is released on Friday. However, Friday brings with it perhaps an even bigger event, when Moody’s Analytics looks to review South Africa’s credit rating. A downgrade to junk status could prove difficult for the South African Rand to recover from.
Pound to South African Rand (GBP/ZAR) Exchange Rate Forecast
Brexit is at the forefront of market minds at the moment with the European Council summit rapidly approaching. The dinner and subsequent meeting starting on October 17th was initially the deadline set for both sides to reach an agreement. However, recent speculation suggests a deal will have to be agreed in November instead.
European Council President Donald Tusk said:
‘In October we expect maximum progress and results in the Brexit talks. Then we will decide whether conditions are there to call an extraordinary summit in November to finalise and formalise the deal.’
This week, Arlene Foster, the leader of the Democratic Unionist Party (DUP) which props up Theresa May’s government, heads to Brussels for talks with lead EU negotiator Michel Barnier. While both the UK and EU are re-writing their proposals, Foster has suggested she’s not fond of either. Her main reason is the suggestion of checks and controls between Northen Ireland and the British mainland.
‘As we leave the EU, we should do so as one nation. The United Kingdom single market must be protected with no new borders between Northern Ireland and Great Britain being created. From day one this has been the DUP’s only red line.’
The Pound to South African Rand (GBP/ZAR) exchange rate is trending in the region of 19.4355.