The Pound South African Rand exchange rate has tumbled over the past week, and has further weakened today amid a risk-on mood fuelled by the Federal Reserve reiterating that it will maintain loose monetary policy.
What’s Been Happening: Pound Slumps on Investor Profit Taking
The Pound South African Rand exchange rate has fallen over the past week as GBP exchange rates experienced a sharp decline after the Easter weekend due to investor profit taking in Sterling and concerns over the effects of the AstraZeneca vaccine in under 30s.
The Pound had been well supported by economic optimism before Easter, with Covid-19 rates continuing to drop and hopes mounting ahead of next week’s easing of lockdown measures, but GBP soon fell.
In South African economic data, last week saw the release of the latest trade balance report for February, which beat forecasts and rose to nearly 29 billion.
With the outlook for China, South Africa’s biggest trading partner, looking increasingly positive, and rallying commodity prices, the Rand has made significant gains.
Three Things to Watch Out for
- Commodity Prices
The South African Rand could continue to find support from stronger commodity prices as global economic demand picks up.
With industrial metals nearing record highs, the Rand is likely to receive a boost as metals are a major South African export.
- UK GDP
The UK GDP data release early next week will likely drive movement in GBP exchange rates as forecast for February points to a positive 0.4% reading, up from January’s -2.9%.
- UK Covid-19 Situation
The Pound South African Rand exchange rate could find support this week if the UK’s Covid-19 situation shows signs of further improvement.
The Pound South African Rand could remain under pressure this week if ZAR exchange rates continue to gain on rising commodity prices and increased risk-on market trade.