Pound South African Rand Exhange Rate Climbs despite Gloomy UK Outlook
While the Pound (GBP) has fallen against many major rivals, the Pound Sterling South African Rand (GBP/ZAR) exchange rate has been advancing. The South African Rand (ZAR) has plunged across the board as markets express concern over South Africa’s coronavirus situation.
After opening this week at the interbank level of 20.11, GBP/ZAR briefly slipped as Britain entered a new national lockdown.
However, this drop was short-lived. Last night GBP/ZAR touched on a 3-month-best of 20.97, and at the time of writing on Friday the pair was trending just lower in the interbank region of 20.86.
A new more infectious strain of the coronavirus in South Africa, combined with difficulty procuring vaccines, is throttling the Rand outlook.
Pound (GBP) Exchange Rates Avoiding Losses Against Rand
Against many major currencies, the Pound (GBP) has been weaker this week. Investors sold the British currency at the beginning of the week in reaction to news that Britain would enter a third national lockdown.
However, GBP/ZAR was able to recover due to broad weakness in the South African Rand. This is despite a lack of much domestic support leading to demand for the Pound.
This week’s UK data has been largely underwhelming. UK PMI stats from December fell short of expectations.
The British currency did edge higher at the end of the week though, due to weakness in its rival the Euro (EUR).
South African Rand (ZAR) Exchange Rates Flounder Near Lows on Coronavirus Fears
The South African Rand has been hit hard by South Africa’s coronavirus situation lately.
Despite improving external factors, South Africa is enduring a more infectious strain of the virus. What’s more, the nation’s vaccine procurement plans are facing major challenges.
According to Hans Gustafson, Emerging Market Strategist at Swedbank AB:
‘The main explanation is related to worries regarding the mutation of the virus and risks for serious lockdowns in the country,
The external environment is very positive for the Rand with the Dollar trending lower and precious metals zooming. If those conditions disappear, the Rand is very vulnerable.’
Pound South African Rand (GBP/ZAR) Exchange Rate Unlikely to Fall Without Rand Recovery
Sterling has already done a lot of falling in recent weeks. Unless Britain’s outlook sees another shock to the downside, investors are unlikely to sell the Pound much more in the coming sessions.
As a result, the Pound to South African Rand exchange rate is likely to avoid major losses unless appetite for the South African Rand improves.
The South African Rand may remain unappealing in the coming week, unless there is an improvement in South Africa’s coronavirus situation.
Stronger than expected South African manufacturing or retail sales stats next week could support the South African Rand as well.
As for the Pound, it is more likely to be driven by rival strength and UK coronavirus developments for most of next week.
At the end of next week, UK growth and production stats could also influence the Pound South African Rand exchange rate.