GBP/ZAR Exchange Rate Edges Higher as UK Covid-19 Rates Continue to Fall
The Pound to South African Rand (GBP/ZAR) exchange rate rose today, with the pairing currently trading around R20.59.
Sterling continued to benefit from growing confidence in the UK’s economy today following this week’s announcement of Downing Street’s lockdown exit strategy.
Prime Minister Boris Johnson has also expressed optimism over lockdown restrictions coming to an effective end by later June.
Michael Hewson, an analyst at CMC Markets, also explained:
‘The whole debate over negative rates, which has taken up so much time over the past couple of years seems somewhat moot right now, with some market participants now hedging themselves against the prospect that the Bank of England’s next move may well be a rate rise. Who saw that coming?’
In coronavirus news, today saw daily cases of the virus fall by -2,136 compared to last week, while those in hospital have fallen by -4,228 against last week’s report.
Currently 26.8% of the population have received the first dose of the coronavirus vaccine.
As a result, GBP investors are becoming more optimistic that falling cases could accelerate the speed at which restrictions are eased in the coming months.
South African Rand (ZAR) Exchange Rate Falls as South Africa’s Economy Struggles from Effects of Covid-19 Pandemic
The South African Rand suffered today as South Africa’s economy continues to reel from the effects of the Covid-19 pandemic.
Today saw the South African Government outline its 2021 budget as the Africa’s most industrialised economy continues to struggle with the fallout of the pandemic alongside a recession.
Analyst at AFP commented:
‘South Africa is the country hardest-hit by coronavirus in Africa.
‘Last March, it imposed one of the world’s strictest lockdowns, which has been gradually eased over the past year, but the measures to stem the spread of the virus, including a six-month border closure, blocked tourists and capital from overseas.
‘The global economic downturn brought on by the virus dried up revenues further, stifling emerging markets and compounding pre-existing problems.’
As a result, the ZAR/GBP exchange rate is subdued because of growing concern for South Africa’s economy.
GBP/ZAR Exchange Rate Outlook: Could a Grim Outlook for the South African Economy Continue to Weigh on the Rand This Week?
The South African Rand will likely remain subdued this week as the outlook for South Africa’s economy remains bleak.
However, improving risk-sentiment could benefit ZAR as investors begin to invest in risk-sensitive currencies.
Meanwhile, the Pound will continue to head higher against the South African Rand if confidence continues to grow in the UK economy.
The GBP/ZAR exchange rate, therefore, will likely continue to rise as UK Covid-19 cases continue to drop.