June 2, 2021 - Written by John Cameron
STORY LINK Pound South African Rand Exchange Rate Dips
GBP/ZAR Exchange Rate Sinks as Risk-On Mood Boosts South African Rand
The Pound South African Rand (GBP/ZAR) exchange rate fell by -0.3% today. ZAR continues to be buoyed by positive risk-sentiment as key world economies reopen. The pairing is currently fluctuating around R19.41.
The South African Rand (ZAR) benefited from news that Germany – the Eurozone’s largest economy – had downgraded its Covid-19 alert level from ‘very high’ to ‘high’.
Yesterday also saw the UK report zero deaths from Covid-19.
This buoyed confidence in the global economy as hopes that rates could ease off throughout summer will help both the US economy and Asian markets recover.
However, ZAR investors have become more cautious about the outlook for the global economy after the latest South African unemployment rate for the first quarter rose by 32.6% – an all-time high.
Anchor Capital investment analyst Casey Delport commented on the statistic:
‘All in all, these numbers are indicative of an economy still greatly impacted by the COVID-19 pandemic and resulting lockdowns of 2020, with many capable workers still inactive.’
As a result, we could see the South African Rand begin to struggle if the outlook for the nation’s economy shows any signs of deteriorating during this week’s session.
Pound (GBP) Exchange Rate Falls Despite the Announcement of Zero UK Covid-19 Deaths
The Pound (GBP) struggled to rise against the South African Rand today despite the UK recording zero Covid-19 deaths for the first time in ten-years.
Prime Minister Boris Johnson also confirmed that there is still ‘nothing in the data at the moment that means we cannot go ahead with step four.’
However, Johnson also added that it was still too ‘ambiguous’ to know whether enough people had been protected by vaccinations to allow a further easing of restrictions on 21 June.
As a result, GBP investors have become more cautious about the outlook for the British economy, as a delay in easing lockdown measures would limit the nation’s economic recovery.
In UK economic news, today saw mortgage approvals rise in April.
The Bank of England (BoE) commented on the data:
‘Approvals for house purchase ticked up in April, to 86,900, from 83,400 in March. They have fallen from a recent peak of 103,400 in November, but have remained relatively strong.’
Nevertheless, worries over a potential delay in the easing of lockdown measures this month has limited the appeal of the Pound throughout today’s session.
GBP/ZAR Exchange Rate Forecast: Risk Sentiment in Focus
Pound (GBP) investors will be looking ahead to tomorrow’s publication of the latest UK services PMI for May.
Any signs of improvement in the UK’s largest sector would drive-up the Pound to South African Rand exchange rate.
Tomorrow will also see a speech from the BoE Governor Andrew Bailey. If his is notably bullish in his commentary about the British economy, then the Pound would head higher.
Risk sentiment will continue to drive the GBP/ZAR exchange rate this week, however. Could risk-on mood see the South African Rand head higher before the end of this week?
International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way,
ensuring you get the best exchange rates on your currency requirements.
TAGS: Pound Rand Forecasts South African Rand Forecasts