GBP/ZAR Exchange Rate Surges as Land Expropriation Reforms Spook Investors
The Pound South African Rand (GBP/ZAR) exchange rate is currently trading at a two-week high in the wake of a shock announcement from South Africa’s President, Cyril Ramaphosa regarding the expropriation of land without compensation.
At the time of writing the GBP/ZAR exchange rate is up by around 0.5%, with the pairing having rebounded from a one-month low struck on Tuesday.
South African Rand (ZAR) Exchange Rate Dealt Blow by Land Expropriation Uncertainty
The South African Rand (ZAR) looks set to ride another political rollercoaster of uncertainty in the coming weeks as President Ramaphosa announced he would be looking to amend the constitution to more explicitly allow for expropriation of land without compensation.
Ramaphosa announced the move after a two-day lekgotla of the ANC’s National Executive Committee and said the change would make his party’s stance on land ‘unambiguous and clear’.
However the announcement was not met by cheers from ZAR investors, with many fearing this could see policy uncertainty begin to unsettle the South African Rand, just as things appeared to be finally cooling off.
Will Dovish Rate Hike From the BoE Damage the Pound (GBP) Exchange Rate?
Meanwhile the outlook for the Pound (GBP) exchange rate appears murky at best as markets await the Bank of England’s (BoE) August rate decision.
The bank is widely expected to raise interest rates this month, only the second rate hike in a decade and see as long overdue by some GBP investors.
However analysts are pessimistic that this could be the start of a new tightening cycle as seen with the US Federal Reserve.
Instead economists are forecasting that recent political uncertainty and lacklustre inflation figures will result in a ‘dovish’ hike from the bank this week, likely dragging on the Pound.
GBP/ZAR Exchange Rate Forecast: UK Service Sector Slowdown to Weaken Sterling
Looking ahead past the Bank of England’s rate decision, the Pound South African Rand (GBP/ZAR) exchange rate could see further losses on Friday, with the publication of the UK’s latest Services PMI.
Economists are forecasting Friday’s data will reveal activity in the UK’s all important service sector slowed again last month, likely applying further downward pressure on Sterling.
Meanwhile movement in the Rand is likely to continue to be driven by the political uncertainty surrounding the land expropriation changes, with the emerging currency likely to remain on the back foot should the move appear to upset the applecart.
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