Pound to South African Rand Exchange Rate Advances as Rand Falls Back from Highs
The South African Rand (ZAR) experienced a strong rebound in demand earlier this week, but the Pound Sterling to South African Rand (GBP/ZAR) exchange rate is advancing again today. The Rand’s support has already weakened.
Since opening this week at the level of 19.81, GBP/ZAR has seen significant losses. However, the pair has only lost around half of last week’s extremely notable gains.
This week’s GBP/ZAR low point was 19.09, but last week saw the pair surge around a Rand from 18.82 to 19.81.
At the time of writing, GBP/ZAR is trending near the level of 19.39 as investors sell the Rand again. The Pound (GBP) is also steadying, but its potential for gains is limited due to this week’s hard Brexit fears.
Pound (GBP) Exchange Rate Strength Limited by Hard Brexit Jitters despite Strong UK Data
After an optimistic January leading up to the Brexit date, the Pound was finally hit by the reality of the Brexit process again this week.
Stronger than expected UK data kept investors confident that Britain’s economy could rebound and offset Bank of England (BoE) interest rate cut speculation, but the Pound still slumped.
At the beginning of the week, tough stances taken by UK and EU officials reminded markets that upcoming negotiations may not go smoothly. This led to a plummet in the British currency.
Concerns of 2020 negotiations ending in a hard Brexit, including the possibly severing of the City of London as a financial centre, heavily limited the Pound’s appeal this week.
What’s more, analysts expect these uncertainties to keep weighing on the Pound going forward. According to Marshall Gittler, Head of Investment Research for BDSwiss Group:
‘I expect that the post-Brexit trade negotiations will continue to weigh on Britain, a country with one of the largest current account deficits in the world,’
South African Rand (ZAR) Exchange Rates Falling Again as Risk-Aversion Returns
At the beginning of the week, global market developments helped the South African Rand to mount a surging recovery.
The Rand is commonly correlated to risk and trade sentiment.
A lack of shocking developments in the coronavirus outbreak was perceived as a relief, and markets spent some of the week more willing to take risks. This, as well as weaker oil prices, briefly boosted the Rand much higher.
However, the week’s South African data continued to disappoint investors.
Yesterday’s South African business confidence report fell as the market’s return to risk was cooling off, dampening Rand appeal.
Today, the South African Rand is being dragged lower by South African economic concerns, as well as fresh market jitters over the rising number of coronavirus deaths.
Pound to South African Rand (GBP/ZAR) Exchange Rate Outlook Depends on Geopolitical Developments
The Pound to South African Rand (GBP/ZAR) exchange rate is currently rising. This is due to coronavirus concerns weighing on the risk-correlated Rand, but the pair is still likely to end the week lower following the Pound’s broad weakness.
With both the Pound and Rand influenced heavily by global developments over the past week though, these factors could remain in focus for outlooks going forward.
The Pound outlook remains limited as hard Brexit jitters persist. The outlook is most likely to rise if there are fresh signs that UK-EU relations could improve.
Similarly, the Rand outlook is more likely to strengthen if the coronavirus outbreak shows signs of being kept under control. On the other hand, if the coronavirus spread shows a shocking increase, the Rand could see fresh losses.
The Pound to South African Rand (GBP/ZAR) exchange rate outlook is also likely to rise if South African data shows persisting weakness.
Comments are closed.