GBP/ZAR Exchange Rate Strikes Two-Month High as Coronavirus Panic Grips the Rand

The Pound to South African Rand (GBP/ZAR) exchange rate roared higher last week against a backdrop of South Africa’s worsening coronavirus situation.

What’s Been Happening: Rand Plunges on Coronavirus Fears

The South African Rand entered freefall last week as the rapid spread of a new variant of Covid-19 grew increasingly worrying for ZAR investors.

This stoked speculation that the country faced a new lockdown, fears of which saw the Rand collapse in spite of the prevailing risk-on tone last week.

However, the Rand was able to claw back some ground at the very tail end of the session after Health Minister Zweli Mkhize announced that the government had secured its first vaccines

At the same time, whilst it was able to advance against the Rand, the Pound suffered in broader trade, after a worrying surge in coronavirus cases forced England and Scotland back into lockdown.

Adding to the pressure on Sterling was Boris Johnson’s waring that the new measures could last into March.

Three Things to Watch Out for This Week

1. UK Covid News

With UK coronavirus cases continuing to surge, the UK government has warned that the country is facing its ‘worst weeks’ and that more restrictions may be needed, the prospect of which is likely to weigh on the Pound.

2. South African Coronavirus Headlines

ZAR investors will also be focused on domestic coronavirus developments this week, with the Rand vulnerable to any hints that President Cyril Ramaphosa could impose stricter restrictions.

3. UK Services PMI

Also influencing GBP exchange rates this week will be the publication of the UK’s latest monthly GDP figures. November’s release is expected to report a sharp contraction of growth which could pressure Sterling sentiment.

GBP/ZAR Forecast

Looking ahead, it’s safe to assume that coronavirus developments will continue to act as the main catalyst of movement in the GBP/ZAR exchange rate this week, potentially leading to more volatility in the pairing as a result.

Matthew Andrews

Contact Matthew Andrews