The Pound to South African Rand (GBP/ZAR) exchange rate was met by a convincing sell-off last week as a prevailing risk-on tone turbocharged the Rand.
What’s Been Happening: Rand Soars on US Stimulus Hopes
The South African Rand enjoyed some robust support through last week’s trading session as a marked improvement in investor sentiment reflected well on the emerging market currency.
This upbeat mood was particularly driven by US stimulus optimism, with the coinciding fall in the US Dollar (USD) underpinning the Rand’s strength.
Further boosting ZAR exchange rates was the news that the South African government had won it court case over public-sector wages, which should boost the country’s efforts to repairs its significant budget deficit.
The Pound, meanwhile, could off to a solid start last week as an agreement between the UK and EU to extend Brexit trade talks, and some optimistic comments from EU officials were cheered by GBP investor.
However, Sterling failed to maintain this momentum through to the end of the week, with the GBP/ZAR exchange rate plunging after Boris Johnson expressed doubts on whether a Brexit deal would be struck.
Three Things to Watch Out for This Week
1. UK Coronavirus News
The emergence of a new, more infectious strain of Covid-19 in the UK has spread panic through markets so far this week, with the Pound vulnerable to losses amid fears of another national lockdown.
2. South African Coronavirus Headlines
Simultaneously the outbreak of another coronavirus variant in South Africa is driving a resurgence of the virus in the country, something which weigh on the Rand this week.
3. Brexit Developments
Potentially infusing even more volatility into the GBP/ZAR exchange rate this week will be Brexit. Could a last-minute deal prove the perfect Christmas gift for Sterling?
Looking ahead, the GBP/ZAR exchange rate is likely to trade in a wide range this week as Brexit and coronavirus jitters continue to drive markets.