March 16, 2021 – Written by John Cameron
GBP/NZD Exchange Rate Rangebound as UK-EU Relations Sour
The Pound South African Rand (GBP/ZAR) exchange rate held steady today as concerns over souring UK-EU relations have weighed on confidence in the UK economy. The pairing is currently fluctuating around R20.63.
Marios Hadjikyriacos of XM explains:
‘Sterling is on the retreat after the EU launched legal action against the UK over its decision to delay post-Brexit checks on goods going to Northern Ireland. Brexit risks have flown under the radar lately but could return to haunt the pound considering that the details governing financial services haven’t been settled yet.’
As a result, the GBP/ZAR exchange rate has fallen now that the EU’s legal action against the UK’s actions over Northern Ireland, which is on the border with the EU.
Added to this, several countries within the EU have suspended the AstraZeneca vaccine following concerns over blood clotting reports.
Consequently, relations between the UK and the EU, which are continuing to sour, has limited the appeal of the Pound.
South African Rand (ZAR) Steady as Risk-Off Mood Limits Appeal of Risky Assets
The South African Rand (ZAR) also struggled today as concerns for South Africa’s economy continue to drag on the nation’s economic confidence.
Additionally, risk-sentiment is beginning to fall now that several nations suspend the AstraZeneca vaccine and suffer from rising numbers of coronavirus infections.
Consequently, demand for the risk-sensitive South African Rand has suffered this week.
Commenting on the South African Rand, Bianca Botes, the executive director at Citadel Global, said:
‘The rand continues its range-bound trading as it struggles to find momentum and any real direction.’
Analysts at Reuters said:
‘South Africa’s Rand was little changed early on Tuesday, as the currency continued to take its cue from swings in global market sentiment.’
GBP/ZAR Forecast: Could Strong South African Retail Sales Data Boost the Rand?
South African Rand (ZAR) investors will be awaiting tomorrow’s publication of January’s South African Retail Sales data.
Any marked improvement in retail sales at the beginning of the year would provide the South African Rand with a boost.
However, the ZAR/GBP exchange rate will largely be driven by global risk sentiment.
If Covid-19 cases continue to rise in Europe, then the risk-sensitive South African Rand would begin to fall against Sterling.
The GBP/ZAR exchange rate could head higher this week, however, if the outlook for Britain’s economy continues to improve.
Speculation ahead of the Bank of England’s (BoE) interest rate decision on Thursday will also drive the Pound.
Any signs of a bullish central bank, however, would drive-up Sterling.
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TAGS: Pound Rand Forecasts South African Rand Forecasts