April 30, 2020 - Written by John Cameron
STORY LINK Pound South African Rand (GBP/ZAR) Exchange Rate Rises as No 10 Reluctant to ‘Gamble Away’ Covid-19 Success
GBP/ZAR Exchange Rate Edges Higher on UK Lockdown Easing Plans
The Pound to South African Rand (GBP/ZAR) exchange rate rose by 1% today after the British Government said it would not ‘gamble away’ success by prematurely easing its lockdown measures. The pairing is currently trading around R22.856.
A spokesman for Downing Street commented:
‘We don’t want to relax the social distancing measures or do anything which could lead to the virus, which the British public have done so much to suppress, being able to spread in an exponential way again, and that will guide our approach as we move forward.’
As a result, Sterling traders are growing increasingly optimistic that the UK could miss a ‘second wave’ of the coronavirus, while hopes are also increasing that the Government could consider easing lockdown restrictions in the coming weeks.
Meanwhile, Labour leader Sir Kier Starmer has pushed for greater transparency for what comes next.
Sir Starmer commented:
‘I think the government were slow into lockdown, slow on testing, slow on protective equipment, and may now be slow on our exit strategy.’
Today saw Sterling rise on a boost in risk appetite after Gilead Sciences’ announced that it was making progress with its anti-Covid-19 drug, Remdesivir.
South African Rand (ZAR) Falls as S&P Downgrades Rand
The South African Rand (ZAR) has suffered from rising anxieties over South Africa’s struggling economy, with the coronavirus threatening to destabilise an already precarious balance.
Furthermore, Wednesday saw S&P Global slashed the South African Rand to junk status.
S&P said in Wednesday’s statement:
‘South Africa’s already contracting economy will face a further sharp COVID-19-related downturn in 2020.’
‘The COVID-19 health crisis will create additional and even more substantial headwinds to GDP growth, owing to a strict five-week domestic lockdown, the markedly weaker external demand outlook, and tighter credit conditions.’
As a result, the South African Rand (ZAR) has continued to suffer as concerns over the health of South Africa’s economy continue to grow.
GBP/ZAR Forecast: Could Sterling Rise on a UK Lockdown Easing Plan?
South African Rand (ZAR) investors will be looking ahead to tomorrow’s release of South Africa’s Business Confidence Index for April. If this significantly falls this month, then we could likely see ZAR sink deeper.
Tomorrow will see the release of the final UK Markit Manufacturing PMI. If this falls below consensus, then we could see Sterling shed some of its gains.
The GBP/ZAR exchange rate will be driven by coronavirus factors this week. However, if the Government does announce plans to ease its lockdown restrictions, then we could see the Pound continue to rise.
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TAGS: Pound Sterling Forecasts South African Rand Forecasts