The Pound to South African Rand (GBP/ZAR) exchange rate traded in a wide range last week, as risk appetite fluctuated wildly.
What’s Been Happening: Rand Infused with Considerable Volatility
The Rand found itself on a bit of rollercoaster ride last week, as the currency continued to dance to the tune of fluctuating risk-on and risk-off sentiment.
Notable catalysts for this volatility in ZAR were concerns over the size and timing of the next US stimulus package, fears over a potential credit rating downgrade, and the chaotic scenes seen on Wall Street as equity markets were rocked by an army of small retail traders.
On the other hand the Rand benefited from the International Monetary Fund (IMF) upgrading its 2021 global growth forecast, as well as the news that South Africa granted emergency approval to AstraZeneca’s coronavirus vaccine.
The Pound, meanwhile, found itself largely along for the ride. Sterling made attempts to rally on the back of a stronger-than-expected labour report and the continued success of the UK’s vaccination programme.
Sterling was unable to stabilise at its best levels however, with fresh doubts over the timeline for easing the UK’s lockdown, and a row between the UK and EU over vaccine delays taking a toll on GBP/ZAR.
Three Things to Watch Out for This Week
- South African Coronavirus Developments
The Rand already seems to be off to a solid start this week, with the easing of some domestic restrictions and the arrival of the first doses of the AstraZeneca coronavirus vaccine, helping to cheer local investors. If the headlines remain broadly positive could we see ZAR exchange rates continue to climb?
- UK Coronavirus Headlines
The Pound is also likely to remain sensitive to domestic coronavirus developments this week, with Sterling posed to surge if Boris Johnson signals plans to start easing lockdown measures this month.
- BoE Rate Decision
Also influencing GBP exchange rates this week will be the Bank of England’s (BoE) latest rate decision. No policy changes are expected this month, but will a hawkish tone from Governor Andrew Bailey help to bolster the Pound?
Looking ahead, it seems likely that trade in the GBP/ZAR exchange rate will remain volatile this week as coronavirus development remain a key focus for markets.