The Pound has fluctuated wildly against the Rand due to concerns about a bad Brexit deal. This turbulence could only intensify as negotiations continue, which means GBP ZAR volatility may be here to stay.
The latest concerns about the final Brexit deal began with an allegedly fractious dinner between UK PM Theresa May and European Commission President Jean-Claude Juncker.
While the rumours are still unconfirmed, the growing traction of these allegations has negatively impacted the Pound.
According to reports, Juncker left Downing Street ’10 times more sceptical than before [entering]’ and later told the German Chancellor that May was in a ‘different galaxy’ with her expectations of Brexit talks.
May denied these difficulties, but more recent comments have seemingly confirmed the animosity. The PM has gone on the offensive, stating;
‘During the Conservative party leadership campaign I was described by one of my colleagues as a bloody difficult woman. I said at the time the next person to find that out will be Jean-Claude Juncker’.
The situation has escalated further with Brexit Secretary David Davis’ comments on the Brexit ‘divorce bill’.
Speculated to be between €50bn to €100bn, this parting figure has been a point of contention among UK and EU officials. Davis’ latest input has been inflammatory;
‘We will not be paying €100bn. We will do it properly. We will take our responsibilities seriously. We have said we will meet our international obligations, but there will be international obligations and there will be ones that are correct in law, not just the ones the [European] Commission want’.
If stubbornness and miscommunication seem to be widening UK-EU divisions, the Pound could progressively slide against the Rand as the situation worsens.
Despite this threat to the Pound’s value, the Rand is in an equally perilous position due to South African President Jacob Zuma.
Infamous for his controversial tenure as President, Zuma is largely responsible for historical Rand crashes due to his sporadic economic decisions.
According to Johannesburg Professor Daryl Glaser, however, opposition parties may be divided on the best method to politically defeat Zuma;
‘I suspect opposition leaders are torn on the subject. A lot may genuinely want Zuma to go and may hope that [this] spawns chaos and division in the ruling [ANC] party. It is also undeniable that Zuma is something of an electoral asset to opposition parties’.
If rivals see Zuma’s continued presence as a long-term gain in the next election and limit their opposition, the Rand could slump due to the possibility that leaving Zuma temporarily unopposed will only further endanger the national economy.
Recent Interbank GBP ZAR Exchange Rates
At the time of writing, the Pound to Rand (GBP ZAR) exchange rate was trading up at 17.26 and the Rand to Pound (ZAR GBP) exchange rate was trading down at 0.05.
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