Pound South African Rand Fluctuates as UK Businesses Feel Brexit Pressure

The Pound (GBP) to South African Rand (ZAR) exchange rate fluctuated today as investors reacted to a downbeat UK business survey.

Sterling Softened by Brexit Business Fears

The Pound was weakened today by the release of a survey from Ipsos MORI that reported that 58% of companies are already being hurt by the UK’s vote to leave the EU.

The report surveyed leaders from 100 of the 500 largest companies operating in the UK about the impact of Brexit, with many pointing to the pressures from expected tariffs and the difficulty in finding investors as being key issues facing businesses post-Brexit.

Most executives only expect it to get worse in 2017 as well, with consumers expected to cut their spending as prices rise. As Ben Page, CEO of Ipsos MORI commented;

‘According to respondents there is no sign that this is likely to ease this year, with two thirds saying they thought their business situation would get worse in the next 12 months.’

Meanwhile a separate report on SME’s warned that many smaller firms are struggling since Brexit due to rising import costs thanks to the falling value of Sterling.

South African Rand Suffers as ANC faces Leadership Battle

The South African Rand is also suffering today following the news that the ex-wife of current President Jacob Zuma, Nkosazana Dlamini-Zuma, is likely to face billionaire businessman and deputy president, Cyril Ramaphosa in the ANC leadership battle later this year.

The ANC has been battered and humiliated by persistent corruption allegations in recent years, with the party facing its worse crisis since the end of the apartheid and there are growing concerns that a fierce leadership contest could fracture the party even further.

The uncertainty of the contest is also unlikely to do much for an economy that is already struggling, with fears that it could take focus away from the issues at hand. According to a senior banker;

‘It will paralyse government. The ANC’s ability to fudge things [on policy] is quite impressive . . . but you can’t fudge who the leaders are.’

GBP ZAR Forecast: Parliament to Seek Amendments to Brexit Bill

Theresa May’s plans for Brexit are likely to face their most difficult obstacle yet this week as MPs will be given the ability to amend the government’s Article 50 bill as it passes through the House of Commons.

Should MPs manage to pass an amendment to give parliament a final vote on the terms of Brexit it is likely to prompt a rally in the GBP ZAR exchange rate as investors predict it will help curb the PM’s pursuit of a ‘hard Brexit’.

Meanwhile the South African Rand may slump later in the week as manufacturing production is predicted to have fallen from 1.9% to 0% in December.

Current Exchange Rate

At the time of writing the GBP/ZAR exchange rate was trending around 16.65 and the ZAR/GBP exchange rate was trending around 0.06.