November 24, 2020 – Written by John Cameron
GBP/ZAR Exchange Rate Sinks as Covid-19 Vaccine Hopes Uplift SA Markets
The Pound to South African Rand (GBP/ZAR) exchange rate fell by -0.4% today, with the pairing currently trading around R20.426.
The South African Rand (ZAR) has benefited from this week’s announcement of another successful Covid-19 vaccine trial, this time from the UK’s AstraZeneca, based in Oxford.
As a result, demand for risky assets like the South African Rand has improved, owing to renewed hopes in a faster than previously expected recovery for the global economy.
Furthermore, appetite for the South African Rand has increased on hopes that the Covid-19 vaccine will be rolled out throughout South Africa.
Director of Affordable Medicines at the national department of health, Khadija Jamaloodie, commented:
‘South Africa has a well-respected regulatory authority (SAHPRA) and that in terms of Section 14 of the Medicines and Related Substances Act, no medicine may be sold in the country unless it is registered by SAHPRA.’
However, some ZAR investors are becoming more cautious following South Africa’s recording of over 2,000 new Covid-19 cases.
Pound (GBP) Sinks as BoE Warns of No-Deal Brexit Consequences
The Pound (GBP) struggled today gain against the South African Rand following concerning comments from the Bank of England’s (BoE) Governor, Andrew Bailey, who warned that Brexit could be worse than Covid-19 for the British economy.
Mr Bailey said:
‘It takes a much longer period of time for the real side of the economy to adjust to the change in openness and change in the profile of trade.’
Consequently, GBP investors have become more worried that a no-deal between the UK and the EU could plummet the UK economy into an unprecedented crisis next year.
Other reports have suggested that the UK car industry could suffer a £55 billion loss owing to a no-deal Brexit.
Ashwani Gupta, Nissan’s Chief Operating Officer, said ‘obviously our UK business will not be sustainable’.
However, this week’s news of a successful UK Covid-19 vaccine trial at Oxford’s AstraZeneca has buoyed hopes for the British economy’s recovery.
GBP/ZAR Forecast: Could Brexit Deal Hopes Buoy Sterling?
South African Rand (ZAR) investors will be awaiting tomorrow’s release of the latest South African Consumer Price Index for October.
Any signs of a recovery for the South African economy would prove ZAR-positive.
Additionally, we could see the South African Rand head higher on increasing hopes for a rollout of a Covid-19 vaccine.
Meanwhile, the Pound (GBP) traders will continue to monitor Brexit developments.
If we see any signs of a possible breakthrough in UK-EU Brexit trade talks, then we could see Sterling head higher on hopes of a post-Brexit trade deal.
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TAGS: Pound Rand Forecasts South African Rand Forecasts