Home » GBP » GBP to ZAR » Pound South African Rand (GBP/ZAR) Exchange Rate Jumps despite Africa Bending ‘the Curve’ of Covid-19 Infections

Pound South African Rand (GBP/ZAR) Exchange Rate Jumps despite Africa Bending ‘the Curve’ of Covid-19 Infections

Pound Sterling South African Rand (GBP/ZAR) Exchange Rate Higher despite Africa Beginning to ‘Bend the Curve’ in Infections

UPDATE: The Pound Sterling South African Rand (GBP/ZAR) exchange rate rose by around 0.6% on Thursday afternoon. This left the pairing trading at around R22.7930.

The Rand continued to struggle against the Pound today despite the Africa Centres for Disease Control and Prevention stating the continent is beginning to slowly ‘bend the curve’ of coronavirus infections.

While the spread of the virus was slow in Africa in the early stages, the rate of infection has gradually accelerated. This is especially true in South Africa, which accounts for more than half the case load of over 1.1 million.

According to John Nkengasong, head of Africa CDC:

‘So I think that is really some sign of hope that we are beginning to bend the curve slowly. We take this news with cautious optimism.

‘It’s very, very early, we’re dealing with a very delicate virus that spreads very quickly but it’s important to recognise those slight tendencies that are positive.’

Fed Minutes and Eskom Power Cuts Send Pound Sterling South African Rand (GBP/ZAR) Exchange Rate Higher

The Pound Sterling South African Rand (GBP/ZAR) exchange rate edged 0.2% higher on Thursday morning. This left the pairing trading at around R22.6868.

The South African Rand edged lower on Thursday after the US Federal Reserve’s minutes boosted the Dollar. The minutes from the US central bank were not as dovish as expected which boosted USD and weighed on riskier assets.

The Fed reiterated the coronavirus pandemic is creating high uncertainty over growth prospects in the world’s largest economy. The minutes stated:

‘Uncertainty surrounding the economic outlook remained very elevated, with the path of the economy highly dependent on the course of the virus and the public sector’s response to it.’

Although, markets were disappointed the Fed is not pledging fresh measures to boost the US economy.

Due to an absence of domestic data releases, the Rand has mainly been reacting to global factors.

Meanwhile, South Africa’s state utility firm, Eskom is due to implement a third consecutive day of planned power cuts.

The ‘stage 2’ power cuts would be implemented for the third day today as the breakdowns continued to weigh on the system.

Eskom said in a statement on Twitter that these constraints were likely to continue for the rest of the week, which weighed on ZAR sentiment.

Pound (GBP) Edges Higher as Brexit Talks Continue

Sterling edged higher against a weaker South African Rand, but suffered losses against the US Dollar.

The vague minutes from the Fed also weighed on GBP and limited gains. A number of committee members believed it would be useful to make a revised statement on policy strategy.

However, this statement was enough to push riskier assets including the Pound and Rand lower and boost the safe-haven USD. Although, many believe this will be a short-lived correction.

ING analysts wrote:

‘Risk assets around the world are suffering a corrective 24-hours.

‘The catalyst has been a set of FOMC [Federal Open Market Committee] minutes that has failed to feed the rally by seemingly neither offering enough clarity on strategy changes nor fresh stimulus.’

Meanwhile, Brexit remains in focus for Sterling traders as the deadline to agree a deal with the European Union approaches.

Britain has reiterated that it still hopes to reach a deal by September, and both sides have given themselves a new deadline of October.

Pound Rand Outlook: Will Upbeat PMIs Boost GBP?

Looking ahead to Friday, the Pound (GBP) could make gains against the South African Rand (ZAR) following the release of the latest consumer confidence data.

If GfK’s data reveals confidence in the UK has jumped higher than expected, it will buoy Sterling.

Added to this, traders will be looking to the latest flash PMI data to see whether growth in the services and manufacturing sectors has continued to expand.

If August’s PMI composite expands more than forecast, it will offer GBP support and send the Pound South African Rand (GBP/ZAR) exchange rate higher.