October 20, 2020 - Written by John Cameron
STORY LINK Pound to South African Rand (GBP/ZAR) Exchange Rate Dips as Hopes of US Stimulus Boost Risky Assets
GBP/ZAR Exchange Rate Falls as Hopes Grow for South African Economy
The Pound to South African Rand (GBP/ZAR) exchange rate dipped today, with the pairing currently fluctuating around R21.385.
The South African Rand (ZAR) benefited from rising hopes that America could accept a Covid-19 stimulus package ahead of the US Presidential elections in November.
US House Representatives speaker, Nancy Pelosi, and Treasury Secretary Steve Mnuchin, according to Mrs Pelosi’s spokesman, continue to ‘narrow their differences’.
Meanwhile, ZAR investors are becoming more hopeful as South African President Cyril Ramaphosa takes steps to finalise the nation’s Economic Reconstruction and Recovery Plan.
Ray Mahlaka, the business writer at Daily Maverick, South Africa, commented on the plan:
‘[South Africa’s] energy insecurity, which stunts economic growth and investments, will be fixed by allowing the private sector to self-generate and by incorporating more renewable energy into the national grid by at least 2022.’
With no South African economic data due out this week, investors will be focusing on the South African Finance Minister Tito Mboweni’s announcement on the nation’s budget policy next week.
Any hints of job-creation measures or huge stimulus to bolster the struggling economy proving ZAR-positive.
Pound (GBP) Dips as Downing Street Says there is ‘No Basis’ for Brexit Talks
The Pound (GBP) fell today after Downing Street said that there was ‘no basis’ to resume Brexit talks despite Michel Barnier, the EU’s Chief Negotiator, saying he would ‘intensify’ talks this week.
A spokesperson for the EU also added that it was ‘pretty obvious’ that both sides would need to compromise to reach an agreement.
Prime Minister Boris Johnson’s spokesperson commented:
‘He reaffirmed that the EU have effectively ended those negotiations by stating they did not want to change their negotiating position.
‘Should the EU fundamentally change their position, then the UK would be willing to talk on that new basis.’
In coronavirus news, Number 10 has failed to reach a deal with Manchester over a Tier Three level of restrictions, leaving UK markets cautious as frictions escalate over the Government’s Covid-19 strategy.
Robert Jenrick, British Communities Secretary, commented:
‘I’m disappointed that despite recognising the gravity of the situation, the mayor of Greater Manchester has been unwilling to take the action that is required to get the spread of the virus under control in Greater Manchester and reach an agreement with the government.’
GBP/ZAR Forecast: No-Deal Brexit Fears Could Drag Down Sterling
The South African Rand (ZAR) will remain sensitive to global risk sentiment this week, with the ZAR rising on any clarity ahead of America’s important November presidential election.
However, with rising Covid-19 cases throughout Europe, we could see the risk-averse South African currency compromised as the global economic outlook deteriorates.
Pound (GBP) investors will be awaiting tomorrow’s release of the UK CPI figure for September.
Any improvement in the UK’s economic outlook would prove GBP-positive.
The GBP/ZAR exchange rate will, however, remain dictated by Brexit developments.
If Downing Street remains resolute on its claim of a lack of progress in UK-EU negotiations, then fears of a no-deal Brexit would drag down Sterling.
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TAGS: Pound Rand Forecasts South African Rand Forecasts