Pound Sterling South African Rand (GBP/ZAR) Exchange Rate Falls as Risk Appetite Rises
The Pound Sterling South African Rand (GBP/ZAR) exchange rate slumped by around -0.9% on Monday afternoon, trading at around R23.0433.
The Pound was able to rebound against a handful of currencies on Monday after suffering some losses overnight following the announcement the Prime Minister had been hospitalised.
Boris Johnson had been hospitalised on Sunday night due to persistent coronavirus symptoms.
GBP bounced back after housing minister Robert Jenrick said Johnson was expected back at Downing Street shortly and he was ‘doing well’.
However, the Pound was unable to make gains against the South African Rand on Monday.
The pairing edged lower thanks to an upswing of risk appetite as the number of coronavirus deaths around the world appeared to slow.
The much-needed boost in risk appetite sent traders flocking back to riskier assets such as the South African Rand.
GBP Slides as UK Consumer Confidence ‘Falls off the Cliff’
Sterling remained under pressure today after data revealed the British construction sector saw the largest rate of decline since April 2009.
March’s construction PMI slumped to 39.3 as business expectations fell to the weakest level since October 2008.
Meanwhile, a ‘flash report’ from GfK revealed that the coronavirus pandemic caused British consumers to remain pessimistic.
Consumer confidence suffered the largest fall in over 45 years due to Covid-19 and commenting on this, Joe Staton, client strategy director at GfK said:
‘Our COVID-19 ‘flash report’ shows a dramatic result with consumer confidence falling off the cliff in the last two weeks of March.’
’Junk’ Rating Weighs on South African Rand (ZAR)
The South African Rand edged higher today despite a credit rating downgrade. Ratings agency Fitch downgraded the country’s credit rating to ‘junk’ territory at the end of last week.
In another blow to the South African economy, this followed an earlier long-awaited downgrade from Moody’s last week.
According to Fitch, ‘the lack of a clear path towards government debt stabilisation as well as the expected impact of the COVID-19 shock on public finances and growth’ was one of the main reasons for the decision.
Fitch also noted in its forecast that the country’s GDP rate would slump by -3.8% over the year and the main reason for this is the government-imposed 21-day lockdown.
Pound South African Rand Outlook: Coronavirus and Business Confidence in Focus
Looking ahead, the coronavirus pandemic is likely to remain one of the main drivers for movement of both the South African Rand (ZAR) and Pound (GBP).
If Covid-19 deaths see another spike and do not appear to be slowing down, the risk-sensitive Rand will suffer losses.
Meanwhile, Wednesday’s South African SACCI business confidence could leave the Rand under pressure.
If business confidence plummets further than forecast in March, the Pound South African Rand (GBP/ZAR) exchange rate is likely to rise.
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TAGS: Pound Rand Forecasts