GBP/ZAR Exchange Rate Falls as US Stimulus Hopes Strengthen South African Rand
The Pound to South African Rand (GBP/ZAR) exchange rate dipped by -0.2% today, with the pairing currently fluctuating around R20.929.
The South African Rand (ZAR) has benefited from renewed hopes of a US stimulus package, which would bolster the strength of the world’s largest economy and stabilise the larger global economy.
Analysts at Reuters commented:
‘The stop-start negotiations between opposing sides in the U.S. Senate over a $2 trillion stimulus have kept currencies subdued, but the rand has managed to eke out gains, largely owing to its high-yield status.’
As a result, the risk-averse ZAR has benefited from US stimulus hopes which have eclipsed South Africa’s mid-term budget speech from South Africa’s Finance Minister Tito Mboweni on Wednesday.
Hopes of a Covid-19 vaccine have also buoyed risk-sentiment, pushing the ZAR/GBP exchange rate higher as a number of pharmaceutical giants report success in initial trials.
A spokesperson for AstraZeneca commented:
‘We anticipate efficacy read-outs from phase 2/3 trials between now and the end of the year, and if approved within countries, doses of the potential vaccine could be available for use before the end of the year.’
Pound (GBP) Sinks Despite Extended Brexit Talks
The Pound (GBP) failed to rise against the South African Rand (ZAR) despite news that Brexit talks have been relocated to Brussels as the two sides eye a breakthrough.
A spokesperson for the European Commission:
‘I can confirm that negotiations are ongoing in London right now, they will run until tomorrow and then they will take place here in Brussels, as of Thursday.’
Nonetheless, owing to a lack of definitive progress in post-Brexit trade talks, GBP investors have remained generally cautious.
GBP has also suffered from news that the UK coronavirus death toll has passed 60,000, according to official figures.
With Covid-19 infections rising throughout much of Britain, Pound traders are remaining cautious. This could have devastating consequences for the economy as lockdowns and restrictions intensify.
In UK economic news, today saw UK retail sales significantly drop as Covid-19 restrictions rise.
Ben Jones, CBI Principal Economist, commented:
‘The fall in retail sales in October is a warning sign of a further loss of momentum in the economy as coronavirus cases pick up and restrictions are tightened across many parts of the country.’
GBP/ZAR Forecast: Could Sterling Rise as UK Brexit Trade Deal Hopes Improve?
South African Rand (ZAR) investors will be eyeing tomorrow’s release of South Africa’s latest Consumer Price Index for September.
Any indications that the South African economy could be headed for a worse-than-expected economic downturn would prove ZAR-negative.
Pound (GBP) investors will be awaiting tomorrow’s release of September’s UK Mortgage Approvals figure.
If these dip, then the outlook for the British economy would darken and weigh on the Pound.
The GBP/ZAR exchange rate could edge higher this week, however, if Brexit developments improve and buoy hopes of a post-Brexit trade deal.