GBP/ZAR Exchange Rate Rangebound Despite Worse-Than-Expected UK Retail Sales in December
The Pound to South African Rand (GBP/ZAR) exchange rate held steady today, with the pairing currently fluctuating around R20.98.
Sterling rose today following a cautious tone from the Bank of England’s (BoE) Governor, Andrew Bailey, around the issue of negative interest rates.
As a result, this limited concerns that the BoE could take interest rates into negative territory as the UK lockdown is expected to severely limit the nation’s economic recovery.
In UK economic data, today saw the release of December’s BRC Like-For-Like Retail Sales report, which fell below forecasts at 4.8%.
Helen Dickinson, chief executive of the British Retail Consortium (BRC), was downbeat in her analysis, saying:
‘With shops still closed for the foreseeable future, costing stores billions in lost sales, many retailers are struggling to survive.’
However, today also saw British Chancellor Rishi Sunak warn that the British economy was set to get worse before it gets better.
Consequently, UK markets are remaining cautious as the outlook for the UK economy remains largely dim despite the rollout of Covid-19 vaccines.
South African Rand (ZAR) Recovers as South Africa Secures More Covid-19 Vaccines
The South African (ZAR) recovered from Monday’s lows as South Africa has secured more Covid-19 vaccines.
As a result, this has buoyed appetite for the risk-sensitive ZAR as the outlook for the economy has improved.
With the nation securing more coronavirus vaccines, South African markets are now more confident that the nation can begin to challenge the spread of the virus in the months ahead.
Analysts at Reuters commented:
‘President Cyril Ramaphosa late on Monday said that the country had secured 20 million doses of COVID-19 vaccines, which would be delivered mainly in the first half of the year.
‘South Africa has recorded more than 1.2 million COVID-19 cases and over 33,000 deaths, the most on the African continent, but is yet to start its vaccination drive.
‘Ramaphosa, however, said the cabinet had decided to maintain “level 3” lockdown restrictions, with relatively minor tweaks.’
In South African economic news, today will see the release of the latest Manufacturing Production Index for November.
If this shows a significant downturn in the nation’s manufacturing sector, we will see the South African Rand suffer.
GBP/ZAR Forecast: Could Stricter UK Lockdowns Limit Sterling this Week?
The South African Rand (ZAR) could edge higher this week if South Africa’s Covid-19 vaccine rollout programme is ramped up following the purchase of more vaccines.
Also, risk sentiment will continue to dictate the direction of the ZAR/GBP exchange rate.
Any signs of improvement in the outlook for the global economy relating to Covid-19 vaccines would be ZAR-positive.
The GBP/ZAR exchange rate will continue to be dictated by the UK’s coronavirus developments.
If cases continue to rise and force Downing Street to announce stricter restrictions, we could see the GBP/ZAR exchange rate begin to fall.