The GBP/ZAR exchange rate fell back last week, as Brexit uncertainty and concerns over the UK’s impending job crisis weighed heavily on Sterling sentiment.
Last Week: Pound Undermined by Brexit Stalemate
The Pound traded in a wide range last week as the currency was rocked by Brexit uncertainty.
This initially gave rise to some gains at the start of the session as the UK government expressed its optimism that a trade deal with the EU could be agreed next month.
However this was subsequently shot down by the EU’s Chief Negotiator Michel Barnier, who suggested a deal ‘seems unlikely’ after the latest round of talks came to a close.
Also infusing some volatility into GBP exchange rates were the UK’s latest data releases, with strong headline figures undermined by concerns over the underlying strength of the UK economy, particularly in regards to the accelerating pace of job cuts.
At the same time, the South African Rand fluctuated last week, amidst shifting market sentiment and state utility Eskom’s need to implement load shedding again.
Three Things to Watch out for This Week
- Coronavirus Developments
Potentially acting as a key catalyst in the GBP/ZAR exchange rate this week will be a renewed focus on coronavirus developments, as the recent resurgence in global cases is a cause for concern for many investors.
- BoE Bailey Speech
Driving movement in the Pound this week is likely to be a speech by Bank of England (BoE) Governor Andrew Bailey scheduled for Friday, with Sterling sentiment poised to tumble if Bailey makes any hints towards exploring negative interest rates.
- South African Inflation
For ZAR investors the focus this week looks to be on South Africa’s delayed CPI figures from July. Will another slowing of inflation weaken the Rand as it puts more pressure on the South African Reserve Bank (SARB) to continue easing its monetary policy.
Looking ahead, the GBP/ZAR exchange rate may continue to trade in a wide range this week as coronavirus uncertainty and BoE negative interest rate speculation likely drive the pairing.