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GBP/ZAR Exchange Rate Drops as ANC President Vote is Counted

Published: 18 Dec at 3 PM Tags: Pound Sterling, Dollar Exchange Rate, Currency Exchange, Forex, Rand Exchange Rate, UK, Exchange Rates, Economy,

Pound Loses Ground to Stronger South African Rand despite Stable UK Orders

The Pound has risen against most of its regular peers on Monday’s trading session, with the exception of the stronger South African Rand.

This is no fault of GBP, as the Rand has instead been the stronger currency in the pairing.

Elsewhere, GBP has appreciated because of better-than-expected orders data.

The Confederation of British Industry (CBI) industrial trends for orders reading has remained at 17 points in December, instead of slowing to 14 points as forecast.

This indicates a steady level of growth in orders during the month, going against any concerns about Brexit-based uncertainties.

Looking further ahead this week, the Pound may be affected by Thursday’s finalised GDP growth rate stats for the third quarter.

Estimates are for a minor upgrade on the quarter, but no annual change from 1.5%.

Other finalised figures might not be so supportive for the Pound; business investment is tipped to be revised down in the third quarter.

Such results could be taken as a sign of Brexit-based uncertainties in the UK economy, so could lead to a GBP/ZAR exchange rate decline.

Rand Rallies as Tension Rises over New ANC President Selection

The Rand has dominated in trading today, rising in demand because of high hopes for a positive political development.

The ruling African National Congress (ANC) party is the focus of traders today, as votes are counted to decide the next party President.

This position was previously occupied by Jacob Zuma, the current national President and a long-time thorn in economic prosperity.

The hopes are that Deputy President Cyril Ramaphosa will be elected, but there is still a chance of alternate candidate Nkosazana Dlamini-Zuma claiming victory.

The Rand could crash if Dlamini-Zuma is elected, as she is a controversial candidate as well as being President Zuma’s ex-wife.

After the dust settles from today’s decision, the Rand might find itself affected by US news more than anything else for the rest of 2017.

There will be few economic announcements out of South Africa until the very end of the year, so US Dollar fluctuations might have a greater impact on the ZAR.

Broadly speaking, if the US Dollar rises sharply then the Rand could slip in the pairing, while on the other side a USD decline might be enough to ZAR Rand demand higher.

The next significant data won’t be out until 28th December, when November’s trade balance reading will be announced.

On the month, a significant surplus reduction has been forecast, from 4.56bn to 1.3bn. Such a result could weaken the Rand, leading to a ZAR/GBP drop just before the New Year.