The Pound to South African Rand (GBP/ZAR) exchange rate traded in a wide range last week in response to Brexit and US stimulus uncertainty.
Last Week: Pound Fluctuates in Brexit Dominated Trade
The Pound was met by volatility last week, in response to heighted Brexit uncertainty.
There was unsurprisingly centred on whether or not the UK and EU will be able to reach a post-Brexit trade deal, with conflicting reports on how talks were progressing largely driving these fluctuations.
Sterling also faced a setback with the publication of the UK’s latest GDP figures, as month-on-month growth slowed more than expected in August.
Meanwhile, the South African Rand also fluctuated last week in response to mixed market sentiment after some considerable back and forth over the prospect of another US stimulus package, following some erratic tweets from President Donald Trump.
Three Things to Watch out for This Week
1. Brexit Deadline
A looming Brexit deadline is set to cast a long shadow over the Pound this week. While the risk of a no-deal Brexit is likely to cap GBP demand for the first half of the week, expect to see a sharp uptick in Sterling if UK-EU trade talks enter the ‘tunnel’ ahead of Thursday’s EU summit.
2. Coronavirus Developments
Coronavirus concerns are also likely to act as a key catalyst of movement in the GBP/ZAR exchange rate this week, with concerns over surging infections and new restrictions set to infuse the pairing with additional volatility.
3. South African Retail Sales
In focus for ZAR investors this week will be South Africa’s latest retail sales report. Will a rebound in sales growth in August help to strengthen the Rand?
Looking ahead, trade in the GBP/ZAR exchange rate is likely to remain choppy this week as Brexit and coronavirus uncertainty looks to dominate sentiment.