GBP/ZAR Exchange Rate Edges Higher as Concerns Grow for South Africa’s Economic Recovery
The Pound to South African Rand (GBP/ZAR) exchange rate rose by 0.6% today, with the pairing currently trading around R22.646.
The South African Rand (ZAR) struggled today as concerns over South Africa’s economy continue to be compounded by fears of a global rise in Covid-19 cases. As a result, the risk-sensitive ZAR has suffered a sell-off in favour of safe-haven assets as the outlook for the global economy dims.
South Africa’s Covid-19 cases has passed 500,000 infections over the weekend, while global infections hit around 18 million.
Annabel Bishop, the chief economist at Investec, commented:
‘The uneven nature of the recovery will continue to trip up market sentiment, and so cause EM currency volatility, in particular reflected by the rand, with unexpected data readings having marked impacts.’
Meanwhile, growing concerns over US-China trade relations have also weighed on the risk-sensitive South African Rand. This follows President Donald Trump’s announcement that he could ban the Chinese software company, TikTok, from the United States.
Pound (GBP) Rises Despite Concerns Over UK Covid-19 London Lockdown
The Pound (GBP) edged higher against the South African Rand (ZAR) today owning to a lack of UK economic data. Nonetheless, we could see Sterling begin to struggle if Downing Street announces any further plants to intensify lockdown measures, particularly in key cities like London.
However, UK investors are becoming increasingly concerned over a possible second wave of Covid-19 cases next month, when schools are set to reopen. Several researchers have also urged the government to improve its coronavirus track-and-trace methods ahead of September.
Paul Whiteman, the general secretary of the NAHT school leaders’ union, commented:
‘The success of September’s return to school rests as much on what happens outside the school gates as within. The government needs to ensure that everyone knows what actions they should be taking to keep everyone safe – we’re all going to need to work together to be successful.’
GBP/ZAR Forecast: Could Rising UK Covid-19 Cases Send the Pound Spiralling Downward?
Pound (GBP) investors will be looking ahead to Wednesday’s release of the UK’s latest services PMI for July. Any improvement in Britain’s largest sector would prove GBP-positive.
Meanwhile, South African Rand (ZAR) investors will be keeping a close eye on global economic developments. If Covid-19 cases continue to increase in larger economies like China and America, then we could see the South African Rand suffer as risk sentiment decreases.
The GBP/ZAR exchange rate will continue to remain sensitive to the UK’s domestic Covid-19 developments. As a result, we could see the Pound suffer if Downing Street announces stricter measures on lockdowns or other restrictions.