This was a very strong signal to foreign investors that justice may yet prevail. It’s also an indicator that Gordhan will be allowed to pursue policies aimed at fending off the impending downgrade by rating agencies.
Rand strength against the Pound was short-lived as the Pound posted its best week since Brexit. The strength in the Pound stemmed from the fact that the Bank of England’s statement that no longer expects to cut interest rates. More pertinently, British courts ruled that the government would need parliament’s approval in order to start negotiations to exit the European Union.
There is now, perhaps, a slight possibility that the UK may avoid a Brexit. However, should Brexit go ahead, it will not be as the “hard” Brexit that had seemed likely before the court’s ruling. Expect this uncertainty to remain for the next six months, at least.
What to look out for this week: The Rand and Pound will be affected by the upcoming US elections. It is expected that there will be a lot of uncertainty in the market as investors take positions on the event.
– Raeez Modack