Pound South African Rand Exchange Rate Steady amidst Cautious Trade
The Pound South African Rand (GBP/ZAR) exchange rate is trading in a narrow range so far this morning as investors grow increasingly cautious.
At the time of writing the GBP/ZAR exchange rate is trading at around ZAR20.4146, virtually unchanged from this morning’s opening levels.
South African Rand (ZAR) Bullish Potential to be Undermined by Russia-Ukraine Concerns?
The South African Rand (ZAR) has so far maintained a bullish trajectory this week, with the emerging market currency, remaining defiant in the face of uneven risk appetite.
However renewed concerns over the situation on the Ukraine border threatens to unravel some of the Rand’s gains.
US officials have refuted Russia’s claim it has withdrawn some of its troops from the border and suggest Moscow has actually bolstered its forces in the area with an additional 7,000 men.
Analysts fear this uncertainty will weigh on risk appetite, and weigh on currencies like the Rand.
Francesco Pesole, FX Strategist at ING, suggests:
‘We see an increasingly high probability that the Russia-Ukraine situation will not take any clear direction in the next few days and may morph into a longer diplomatic game – with some degree of diplomatic risk that may linger across asset prices for longer.’
Pound (GBP) Undermined by Brexit Trade Concerns
At the same time, the Pound (GBP) is attracting limited support this morning, following the publication of a report which suggests the UK’s Brexit trade deal with the EU is bad for business.
In a survey of 1000 businesses, the British Chambers of Commerce (BCC) found the majority feel the Brexit trade deal is pushing up costs, increasing paperwork and delays, and putting the UK at a competitive disadvantage.
William Bain, head of trade policy at the BCC, comments:
‘This is the latest BCC research to clearly show there are issues with the EU trade deal that need to be improved.
‘Many of these companies have neither the time, staff or money to deal with the additional paperwork and rising costs involved with EU trade, nor can they afford to set up a new base in Europe or pay for intermediaries to represent them.’
The damning report appears to further highlight how Brexit is dragging on UK economic growth, and could limit the Pound’s upside potential today.
Pound South African Rand Exchange Rate Forecast: Upbeat UK Retail Sales to Bolster Sterling?
Looking ahead to the end of the week, the Pound South African Rand (GBP/ZAR) exchange rate could look to rally on the back of the UK’s latest retail sales release.
January’s figures are expected to report a healthy 1% rebound in sales growth, following a 3.7% contraction at the end of 2021.
A strong uptick in sales growth could help to ease concerns that consumer spending might be suppressed in light of the UK’s cost-of-living crisis.
Meanwhile, in the absence of any notable ZAR data, the direction of the Rand is likely to driven by market sentiment, potentially leading to pressure on the emerging market currency if geopolitical tensions worsen.