The Pound to South African Rand (GBP/ZAR) exchange rate rallied sharply last week, amidst growing optimism for the UK’s economic recovery.
What’s Been Happening: Pound Firms on UK Reopening Optimism
The Pound roared higher against the South African Rand last week, amidst rising expectations regarding the UK’s economic recovery this year.
This was underpinned by continued success of the UK’s vaccination drive, as well as recent coronavirus statistics, which GBP investors hoped would enable a relatively swift reopening of the UK economy.
Further boosting Sterling sentiment were reports that Chancellor Rishi Sunak has deferred plans for significant tax rises in his upcoming budget, in favour of offering more fiscal support.
Meanwhile, the South African Rand faced some headwinds last week amidst concerns that the South African variant of Covid-19 might reduce antibody protection provided by the Pfizer vaccine.
Three Things to Watch Out for This Week
- UK Coronavirus Statistics
Boris Johnson unveiled a cautious plan to ease lockdown measures in the UK at the start of this week, but prefaced it by warning that any lifting of restrictions would be contingent on infection rates continuing to fall, and as such GBP investors are likely to pay close attention to UK coronavirus statistics going forward.
- South African Budget
The main focus for ZAR investors this week will undoubtedly be South Africa’s 2021 Budget. Will Finance Minister Tito Mboweni be able to reassure markets over the health of South Africa’s economy?
- South African Trade Balance
Also influencing the Rand this week will be the publication of South Africa’s latest trade figures, with a narrowing of the country’s trade balance potentially denting ZAR exchange rates at the end of the session.
Looking ahead, we could see the GBP/ZAR exchange rate maintain its positive trajectory this week, if South Africa’s new budget fails to address market concerns over underlying issues with the country’s economy and debt pile.