GBP/ZAR Exchange Rate Rises as Risk-Sentiment Dips on Fears of Second Covid-19 Wave
The Pound to South African Rand (GBP/ZAR) exchange rate rose by 0.4% this morning, with the pairing currently trading around R21.32.
The South African Rand (ZAR) suffered from a sell-off of risky assets this morning as markets remain nervous over rising Covid-19 cases worldwide.
Mohit Kumar, an analyst at Jefferies, commented:
‘Covid-19 cases crossed the 10 million mark, with the number of fatalities crossing 500K. The number of cases in the US remains a concern, particularly in the Southern states where the rise in the number of cases is forcing some states to re-instate lockdown restrictions.’
Meanwhile, South Africa’s own virus cases are expected to rise rapidly, leaving many ZAR investors concerned for the nation’s economic recovery in the months ahead.
South Africa’s Health Minister Zweli Mkhize said:
‘We are seeing a rapid rise in the cumulative number of positive COVID-19 cases indicating that, as we had expected, we are approaching a surge during the … months of July and August.’
As a result, the ZAR/GBP exchange rate has suffered today as investors flock to safe-haven currencies.
Pound (GBP) Edges Higher Despite Coronavirus Being an ‘Absolute Nightmare for the Country’
Sterling rose against the weakened South African Rand this morning. However, dovish comments from Prime Minister Boris Johnson, left some GBP investors jittery. Mr Johnson said that the coronavirus ‘has been an absolute nightmare for the country’.
As investors continue to eye the UK’s economic recovery this week, GBP could begin to slump against many of its peers as the nation’s economic outlook remains uncertain.
In UK economic news, today saw the release of the latest UK consumer credit report for May. This fell to a worse-than-expected £-4.597 billion despite.
Today also saw UK mortgage approvals tumble to just 9,300 in May, down from April’s 15,800. As a result, some GBP investors are becoming increasingly concerned for Britain’s economy.
Mortgage Approvals in the United Kingdom decreased to 9.30k in May from 15.85k in April
They had been 73.7k in Feb! pic.twitter.com/fBjUcgn0pQ
— Dan Cookson (@danc00ks0n) June 29, 2020
Nevertheless, with the UK economy now largely reopen thanks to the Government’s easing of lockdown restrictions and distancing guidelines, we could see the GBP/ZAR exchange begin to edge higher.
GBP/ZAR Outlook: Could Weak UK Economic Growth Weaken Sterling?
South African Rand (ZAR) investors will be lookingto tomorrow’s release of the final SA GDP figures for the first quarter. Any improvement would prove ZAR-positive.
Furthermore, with risk-sentiment dampened on growing Covid-19 cases worldwide, the South African Rand is likely to suffer this week.
The GBP/ZAR exchange rate could rise tomorrow as risk-sentiment will remain subdued on fears of a second wave of Covid-19. However, Sterling could begin to dip if tomorrow’s UK GDP figure for the first quarter is revised downward.