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GBP to ZAR Exchange Rate Tumbles to Month’s Worst despite UK’s Vaccine Optimism

February 11, 2021 - Written by James Fuller

Despite broad demand for the Pound in recent weeks, the British Pound to South African Rand (GBP/ZAR) exchange rate has been tumbling. Investors are buying the South African Rand on market sentiment even more than the Pound, despite South Africa’s own mixed coronavirus pandemic outlook. Investors have been more willing to take risks on global vaccination hopes, as well as low US Federal Reserve rate hike expectations.

While the Pound was bullish last week, GBP/ZAR actually saw sharp losses. GBP/ZAR tumbled from 20.76 to 20.38 last week alone, and this week’s movement has seen continued bearishness.

GBP/ZAR did attempt to rebound when markets opened on Monday, but advance attempts have been limited and at the time of writing on Thursday the pair is trending near lows of 20.23.

These are the worst GBP/ZAR levels since the beginning of the year, over a month ago.

GBP Exchange Rates Benefit from Vaccine Optimism, Limiting Losses



Investors have been selling the Pound against the strong South African Rand in recent weeks, but the Pound has actually been rather appealing against other majors.

Hopes that Britain’s economy will recover from the coronavirus pandemic before other major economies do has been the primary cause of Pound strength in recent weeks.

This is because Britain’s vaccination rollout is further ahead than those of other economies.

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According to Yohay Elam, Analyst at FXStreet:

‘The UK vaccination campaign has reached nearly 20% of the population, the highest in the Western world. While Prime Minister Boris Johnson asked for patience, the UK is heading toward opening the economy. Moreover, the Pound may continue benefiting from upbeat expectations for fourth-quarter growth figures due out on Friday.’


However, some uncertainties have been weighing slightly on the Pound and limiting its appeal against some stronger rivals.

For example, there are rising fears that existing coronavirus vaccinations are not as effective against newer strains of the virus. Vaccine producer AstraZeneca has said that vaccines for these new strains could take over 6 months to develop.

This is making analysts more anxious that it will be quite some time before Britain is able to leave lockdown and economic normalcy will return.

Concerns over fresh post-Brexit trade tensions between the UK and EU are also limiting the Pound’s strength and making it easier for the Rand to gain.

ZAR Exchange Rates Benefit from Rise in Emerging Market Sentiment



The South African Rand is a currency that is often correlated to risk and emerging market sentiment. As a result of this, the Rand has seen strong gains in recent weeks as markets become more confident in buying emerging market assets.

Today, the South African Rand is one of the best performing major currencies on markets.

Investors are buying the Rand ahead of a State of the Nation speech from South Africa President Cyril Ramaphosa. Markets are cautiously optimistic that Ramaphosa could hint at more government support to help the nation tackle the coronavirus pandemic.

On top of this and global coronavirus recovery hopes boosting market sentiment, the South African Rand is also benefitting from this week’s South African data.

South Africa’s business confidence data from SACCI beat forecasts yesterday, and today’s production results were also notably better than forecast.

What’s more, South Africa’s latest manufacturing PMI data from Markit printed at 50.8. This was the best figure since December 2016.

GBP/ZAR Exchange Rate Forecast: Could UK Growth Report Help GBP/ZAR Recover?



The South African Rand could remain strong through the end of the week, but there is potential for the Pound to recover before markets close.

Friday will see the publication of the week’s most notable UK ecostats. This slew of data includes trade balance and production results from December, as well as business investment and growth data from Q4 2020.

Stronger than expected UK Gross Domestic Product (GDP) growth data for the end of 2020 could boost Britain’s outlook. This could bolster Sterling appeal and help GBP/ZAR to recover this week’s losses.

On the other hand though, weaker than expected UK growth data could worsen concerns about the coronavirus pandemic’s impact on Britain’s economy. This could lead to fresh losses in the Pound and make GBP/ZAR even lower at the end of the week.

The South African Rand will be driven more by overall market sentiment. Any surprises from South African President Cyril Ramaphosa’s State of the Nation address could also influence the Pound to South African Rand exchange rate.
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