The Pound to South African Rand (GBP/ZAR) exchange rate rocketed higher last week as coronavirus concerns weighed on market risk appetite.
What’s Been Happening: Rand Tumbles as Coronavirus Risks Grow
The South Africa Rand fell sharply against the Pound and the majority of its other peers last week, as spikes in international and domestic coronavirus cases continued to dampen hopes for a swift global recovery.
Further denting ZAR exchange rates was renewed tensions between the US and China after President Donald Trump signed an executive order banning two popular Chinese apps.
Meanwhile, the Pound’s surge against the Rand was aided by the Bank of England’s (BoE) latest economic forecasts as policymakers revised their 2020 growth expectations up from –14% to –9.5%.
However Sterling failed to consolidate at its best levels at the end of the week after Chancellor Rishi Sunak ruled out any extension to the government’s furlough scheme.
Three Things to Watch Out for This Week
1. UK GDP
Top of the agenda this week will be the UK’s latest GDP estimate. This is likely to exert some significant pressure on the Pound as economists forecast the UK will have suffered a startling 20% plunge in economic growth in the second quarter.
2. South African Unemployment
For ZAR investors the focus this week will be on South Africa’s Q2 employment figures, which is expected to report that unemployment rocketed to a new record low amidst the coronavirus crisis.
3. Coronavirus Headlines
Also influencing the Rand this week will be the ongoing coronavirus uncertainty, with ZAR exchange rates likely to come under pressure so long as global cases continue to rise at an alarming pace.
Looking ahead, the GBP/ZAR exchange rate could give back some of its recent gains this week as markets brace for some abysmal GDP figures from the UK.