The Pound to South African Rand exchange rate traded in a wide range last week, in response to coronavirus concerns and the publication of South Africa’s latest budget.
What’s Been Happening: Rand Rocked by Budget
Trade in the South African Rand was decidedly mixed last week, largely in response to South Africa’s emergency budget.
The Rand weakened through the first half of the week as grim expectations for the budget kept ZAR exchange rates suppressed.
The Rand staged a startling comeback in the latter half of the week however, as investors digested the budget and were surprised to find it more positive than initially feared.
Meanwhile, the announcement that more of the UK economy would be allowed to open from 4 July helped the Pound to take advantage of the Rand’s weakness at the start of last week.
However, Sterling failed to sustain these gains through the second half of the week, as concerns over a second wave of coronavirus infections and renewed Brexit jitters took their toll on the GBP/ZAR exchange rate.
Three Things to Watch Out for This Week
1. Brexit Developments
Brexit headlines are likely to act as the main catalyst of movement in the Pound this week, as GBP investors keep a close eye on the start of a month of ‘intensive’ trade talks.
2. Boris Johnson’s ‘New Deal’
Also set to influence Sterling sentiment this week will be a speech by Boris Johnson, outlining his plans to help the post-lockdown economic recovery in the UK. Will his plans be seen as ‘Rooseveltian’ or will they prove to be a bit of a damp squib?
3. South African GDP
In focus for ZAR investors this week will be South Africa latest GDP print, with the Rand likely to take a dive as economists forecast a sharp drop in domestic growth in the first quarter.
Looking ahead, the GBP/ZAR exchange rate is likely to remain highly volatile this week as Brexit uncertainty and ongoing coronavirus concerns look set to dominate market sentiment.