Picture: REUTERS
Picture: REUTERS

The rand firmed more than 2% against the pound on Thursday afternoon, as sterling slipped on the emergence of difficulties for UK Prime Minister Theresa May.

Brexit secretary Dominic Raab resigned on Thursday morning, setting the stage for more resignations and wider support for an impending no-confidence vote in the UK leader.

Britain’s work and pensions secretary Esther McVey also resigned, Reuters reported, with the pound falling sharply as a result.

The pound reached $1.34 in afternoon trade, and should it weaken to $1.27, further weakness could be in the offing, said Oanda analyst Craig Erlam. “May has survived resignations before but coming on the back of her final deal, this could be far more damaging if others walk as well.” 

At 2.30pm, the rand was up 2.34% against the pound at R18.2654, 1.03% against the euro at R16.1125, and 1.01% against the dollar at R14.2502.

The rand had pared gains against the dollar, with local news also breaking that parliament’s constitutional review committee has approved amending the constitution to allow expropriation of land without compensation.

Analysts said the rand is largely brushing off local developments, although continued uncertainty still weighs on the local currency.

Said Peregrine Treasury Solutions corporate treasury manager Bianca Botes, “It is important to separate the noise from material political events. Chaos in parliament, and empty promises and threats that are not backed up by the introduction of proposals for policy changes can, to some extent, be deemed to be election tactics.”