The Pound to South African Rand (GBP/ZAR) exchange rate shot higher last week, as market sentiment was shaken by a resurgence of global coronavirus cases.
Last Week: South African Rand Battered by Coronavirus Concerns
The South African Rand fell sharply last week as concerns over a second wave of global coronavirus cases took a heavy toll on the emerging market currency.
New coronavirus restrictions in the UK, Europe and other parts of the world, stoked concerns that the global economic recovery could be disrupted, fuelling a market sell-off that spooked markets.
Further souring market sentiment and driving the Rand lower were also renewed tensions between the US and China after the two clashed the annual UN General Assembly in New York.
The Pound, meanwhile, got off to a slow start last week as Boris Johnson’s imposed new coronavirus restrictions and warned that stricter measures could be imposed over the next six months, depending on the trajectory of new infections.
However Sterling sentiment markedly improved in the latter half of the week as Chancellor Rishi Sunak’s announced his new Jobs Support Scheme, bolstering hopes the UK will avoid an unemployment crisis this winter.
Three Things to Watch out for This Week
1. Coronavirus Developments
Coronavirus concerns are likely to remain a key catalyst of movement in the GBP/ZAR exchange rate this week, potentially infusing the pairing with additional volatility.
2. Brexit Headlines
For GBP investors the focus this week will undoubtedly be on the formal Brexit trade negotiations taking place this week. Will crunch talks see a deal finalised this week or will continued deadlocked bruise the Pound?
3. South African Unemployment Figures
South Africa is forecast to report a dramatic rise in unemployment this week, with the Rand poised to tumble as economist expected the jobless rate to have surged to 35% in the second quarter.
Looking ahead, the GBP/ZAR exchange rate is likely to continue to trade in a wide range this week as Brexit uncertainty and second wave fears look to dominate market sentiment.