November 19, 2020 - Written by John Cameron
STORY LINK Pound to South African Rand (GBP/ZAR) Exchange Rate Edges Higher as UK Covid-19 Infections Ease Off
GBP/ZAR Exchange Rate Rises as NHS Reveals Positive Coronavirus Cases are Dropping
The Pound to South African Rand (GBP/ZAR) exchange rate rose by 0.2% today, with the pairing currently fluctuating around R20.53.
Sterling has edged higher today after the NHS revealed that the number of people testing positive for Covid-19 had fallen for the first time since August.
Consequently, hopes for the British economy have recovered, with optimism also being fuelled by a possible role out of a coronavirus vaccine as early as next month.
Additionally, GBP has benefited from renewed hopes that Canada and the UK could be in the process of striking a post-Brexit trade agreement.
Liz Truss, the British Trade Secretary, commented:
‘I do hope that in the future, as Canada is a member of the Trans-Pacific Partnership which has advanced chapters in areas like data and digital, that we will be able to go much further and build a much deeper relationship with Canada.’
Nevertheless, the outlook for the UK economy is still shaky, with the Office for National Statistics showing that one in seven businesses in the last two weeks of October revealed they had little or no confidence that they would survive the coming months.
South African Rand (ZAR) Dips as SARB Holds Interest Rates
The South African Rand (ZAR) dipped today following the announcement of the South African Reserve Bank’s (SARB) interest rate decision, which confirmed forecasts and remained at 3.5%.
South Africa’s financial services company TreasuryONE, commented on the Bank’s decision:
‘SARB kept interest rates unchanged at 3.50% and 7.00% for prime. SARB still expect SA to grow at -8% for 2020, with inflation well contained. USDZAR still trading around R15.50. There is a possibility that we could see hikes in later 2021 again.’
Meanwhile, ZAR investors are becoming more hopeful that a global roll out of a Covid-19 vaccine could improve South Africa’s economy.
Furthermore, with Covid-19 vaccine news being increasingly positive, demand for the risk-sensitive South African Rand has increased this week.
GBP/ZAR Outlook: Could a Covid-19 Vaccine Roll Out Boost the South African Rand?
Pound (GBP) investors will be awaiting tomorrow’s release of November’s UK GfK Consumer Confidence.
Any signs of falling consumer morale in Britain would prove GBP-negative.
Tomorrow will also see the release of the UK Retail Sales for October.
If these sink significantly then the GBP/ZAR exchange rate would suffer.
Meanwhile, the South African Rand will continue to be driven by global risk sentiment.
As a result, we could see the South African Rand head higher on further positive news about a possible roll out of the Covid-19 vaccine.
Brexit will determine the GBP/ZAR exchange rate, however, with any signs of a post-Brexit UK-EU trade deal buoying Sterling.
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TAGS: Pound Rand Forecasts South African Rand Forecasts