Rand weaker as spotlight shifts to Brexit
The rand is faring worst against the pound, which has gained after the UK opposition leader shifted his stance, making a no-deal Brexit less likely
The rand was slightly weaker against major global currencies on Tuesday morning, faring worst against the pound amid rising expectations that the March 29 Brexit deadline will be extended.
UK Labour Party leader Jeremy Corbyn has now switched to supporting a second Brexit referendum, a move analysts said further decreases the prospect of the UK leaving the EU without a deal. UK law makers are expected to meet on Wednesday to either vote for a no-deal Brexit, or request more time for an agreement to be reached.
Last week, Corbyn’s party lost nine members and fears were growing he would lose more if he did not shift positions, said Oanda analyst Edward Moya. Corbyn’s support for a second referendum does not necessarily mean it will happen, and markets are pricing in the chance of an extension.
At 9.40am, the rand was 0.61% weaker at R18.222/£, 0.16% softer at R15.73/€, and and 0.19% down at R18.0557/$. The euro was flat at $1.1354.
Analysts expect the rand to remain somewhat range-bound until there are fresh catalysts, whether domestic or international.
The rand is finding some support from expectations that ratings agency Moody’s will not downgrade SA’s sovereign credit status in March, while developments US-China trade talks have been positive for risk assets so far this week.