load shedding eskom rand

Photo: Pixabay

Thanks to Brexit, the rand just made some serious gains against the pound

Resignations and Parliamentary chaos in Britain has helped the rand make significant progress against the sterling currency.

load shedding eskom rand

Photo: Pixabay

The pound plunged more than 1% against the dollar and euro – as well as 2% to the rand  – on Thursday after Britain’s Brexit Secretary Dominic Raab quit over opposition to a draft deal to exit the EU.

Around 9:25, the pound was worth around $1.2831, compared with almost $1.30 late Tuesday. The euro meanwhile jumped to 88.22 pence, a gain of 1.3%.

Rand to pound exchange rate, 15 November

Starting the day at R18.64 to the pound, the ZAR made steady progress against its sterling counterpart. After Raab’s resignation, there was a steep fall to R18.26 – which is a 2% gain on behalf of the round. The freefall chaos in Blighty has pushed our currency towards breaking into the R17s.

“There’s been a sharp move lower in the pound … after Brexit minister Raab announced his resignation,” said XTB analyst David Cheetham.

What has spooked the pound?

British Prime Minister Theresa May was preparing to sell her Brexit deal to parliament, boosted by news that Europe is preparing a rapid summit to sign off on the agreement.

But the ground began to shift beneath her when Raab said he could not back the deal. Cheetham elaborated further on what would happen next, predicting a “vote of no confidence” is up next for May.

“The resignation is a major blow for May and others will likely follow suit in offering their resignations with her position now growing increasingly tenuous. It now seems probable that a vote of no confidence will be tabled, with some reports stating that the requisite 48 letters will be sent by lunchtime.”

Sterling was also hit by news that official retail sales slid by 0.5% in October compared with September.