GBP/ZAR Exchange Rate Struggles to Sustain Gains as Pound Outlook Mixed
Market jitters about the direction of the coronavirus pandemic weighed on the Pound Sterling to South African Rand (GBP/ZAR) exchange rate once again today. Meanwhile, hopes for more vaccines in South Africa is keeping the Rand buoyed.
Since GBP/ZAR opened this week at the level of 20.71, the pair’s movement has been highly volatile. On many occasions, GBP/ZAR has jumped above the level of 20.90, but the pair has struggled to sustain gains.
GBP/ZAR touched on a fortnight best of 20.97 in the middle of the week during its fluctuations. At the time of writing on Friday though, GBP/ZAR trends below the week’s opening levels again, in the region of 20.67.
Pound (GBP) Exchange Rates Slip as Markets Reassess Vaccine Outlook
For most of the week, the Pound (GBP) has been benefitting from hopes that Britain is ramping up its coronavirus vaccine programmes. Friday’s news that trials of a new vaccine from Novavax are going well also supported the Pound outlook slightly.
However, UK infection rates remain high, and the vaccine rollout continues to see hiccups. This combined with worsening market jitters overall have dampened the Pound’s appeal today.
Still, some analysts believe that coronavirus vaccine speculation could keep the Pound somewhat appealing overall, at least in the short term. According to Analysts at MUFG:
‘We assume there will be a pick-up in the pace to keep the government on track to start a cautious reversal of the lockdown by 8th March
That will help provide further support for the pound and the current outperformance this week could have further to run over the short term.’
South African Rand (ZAR) Exchange Rate Seeing Mixed Demand amid Global Risk-Sentiment Shifts
The South African Rand (ZAR) is a currency often correlated with risk and emerging market sentiment.
With markets panicked over the global coronavirus pandemic and vaccine rollouts today, the South African Rand’s resilience against the Pound is a little surprising.
It comes amid optimistic domestic export data in recent sessions, as well as hopes for South Africa’s own vaccine rollout to improve soon.
According to Warrick Butler, Chief Trader at Standard Bank:
‘The Rand is still within this 15.05 to 15.38 range despite the risk aversion currently taking place. A testament to the local exporter supply,
High real rates are a boon still. However, given that SA has one of the highest debt serving costs globally, one has to wonder just how long the Rand can maintain its heady heights.’
Pound to South African Rand (GBP/ZAR) Exchange Rate Outlook Could Steady on BoE News
There are plenty of major UK ecostats and developments expected next week. If these tell a consistent picture of Britain’s economic outlook, the Pound could steady and be more likely to sustain gains against the broadly volatile South African Rand.
Britain’s final January PMIs will be published through the first half of the week. These will give analysts a better idea of how Britain’s economy performed amid the third UK lockdown so far.
Towards the end of the week though, focus will shift towards the Bank of England (BoE). The BoE will hold its February policy decision on Thursday, and this could cause some big movements if it surprises investors.
If the bank is optimistic about Britain’s coronavirus outlook, it would boost the Pound outlook as well. GBP/ZAR would be more likely to advance in this situation.
On the other hand, if the BoE is dovish about Britain’s outlook due to the coronavirus pandemic’s impact, the Pound could lose much of its recent resilience and fall.
The South African Rand will continue to be driven by shifts in market sentiment and South Africa’s own coronavirus situation.
Upcoming South African data, such as manufacturing PMIs and business confidence, could also influence the Pound to South African Rand (GBP/ZAR) exchange rate.