The Pound to South African Rand (GBP/ZAR) exchange rate traded in a wide range last week, amidst a slew of Brexit and coronavirus related headlines.
What’s Been Happening: Pound Fluctuates on Brexit News
The Pound was met by volatility last week, in response to some back and forth over a potential Brexit trade deal between the UK and EU.
This saw Sterling soar higher in mid-week trade, following reports that the UK’s chief Brexit negotiator, Lord David Frost had told Boris Johnson to be ready to sign a deal ‘early next week’.
But this started to look a little too optimistic, as EU leaders pushed for the publication of the European Commission’s no-deal Brexit plans, curtailing GBP strength in the latter half of the week.
Meanwhile, the South African Rand initially skyrocketed at the start of last week, as the announcement of another potential coronavirus vaccine candidate from US biotech firm Moderna helped to turbocharge market risk-appetite.
However, the Rand was unable to sustain these gains for long, as surging coronavirus cases in the US and Europe, as well as some dovish comments from the South African Reserve Bank (SARB), dampened ZAR demand through the second half of the week.
Three Things to Watch Out for This Week
1. Coronavirus Developments
The announcement of another potential vaccine as well as soaring cases in the US has ensured that the coronavirus pandemic remains top of the agenda this week, likely infusing fresh volatility into the GBP/ZAR exchange rate.
2. Brexit Headlines
Growing optimism that the UK and EU are close to reaching a Brexit deal looks to underpin the Pound this week, and any headlines in support of this are likely to further bolster Sterling sentiment.
3. South African Inflation
For ZAR investors the focus this week will be on the publication of South Africa’s consumer price index. Will a bump in inflation last month help to buoy the Rand?
Looking ahead, the GBP/ZAR exchange rate looks poised to potentially strengthen this week, should Brexit headlines remain broadly positive.