GBP/ZAR Exchange Rate Soars as Risk-Averse South African Rand Suffers
The Pound South African Rand (GBP/ZAR) exchange rate soared by 1.8% as coronavirus concerns weigh on the risk-sensitive South African currency. The pairing is currently trading around R20.372.
The South African Rand (ZAR) has suffered from rising fears over the global economy after the US Federal Reserve slashed its interest rate.
ZAR has also struggled following Sunday’s announcement from South African President Cyril Ramaphosa who declared a national state of disaster over the global coronavirus outbreak.
South African Rand investors are also awaiting signs from the South African Reserve Bank.
Siobhan Redford, an analyst at Rand Merchant Bank, comments:
‘As we await the SARB’s decision, don’t be surprised by continued volatility and weakness in domestic equities and the rand, which will be riding the dizzying waves of global market sentiment, as they react to further news on the spread of the virus, the impact on the global economy and further policy announcements.’
Pound (GBP) Exchange Rate Edges Higher in spite of Covid-19 Fears
The Pound (GBP) rose against the weakened South African Rand (ZAR) in spite of rising criticisms of the British government’s handling of the coronavirus epidemic.
Professor Nichola Raihani, from University College London, commented:
‘The UK government seems to be taking a radically different approach to most other countries and the public have a right to know whether the evidence supporting this approach is strong enough.’
With the UK economy set to be hit from rising cases of Covid-19 markets are wary of investing in Sterling today.
GBP also failed to benefit from today’s release of the UK Rightmove House Price Index for March, which rose by 1%, while the year-on-year figure improved by 3.5%.
Miles Shipside, a director at Rightmove, commented:
‘The market has been waiting for several years for a window of certainty, and 2020 seemed set to be the year when many would look to make a move and satisfy their pent-up housing needs. However, the current fast pace of the housing market could now be temporarily affected by the spread of the Covid-19 coronavirus. We expect that housing market statistics, like other economic indicators, could be prone to volatility over the spring and summer.’
GBP/ZAR Outlook: Could Sterling Sink on UK Covid-19 Fears?
South African Rand (ZAR) investors will be looking ahead to Wednesday’s release of February’s South African Consumer Price Index. Any signs of improvement in South Africa’s inflation data could provide some uplift for the ZAR/GBP exchange rate.
The Pound (GBP) will continue to be driven by coronavirus developments this week. If the outlook for the British economy continues to darken, we could see the GBP/ZAR exchange rate begin to lose some of its gains.
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