Home Forex News GBP/ZAR Exchange Rate Rallies as Risk-On Trade Begins to Fade » Future Currency Forecast

GBP/ZAR Exchange Rate Rallies as Risk-On Trade Begins to Fade » Future Currency Forecast

by FxFinanceStockNews

GBP/ZAR Exchange Rate Rebounds from Weekly Lows

The Pound South African Rand (GBP/ZAR) exchange rate is trending higher this morning as fading risk appetite and Eskom’s woes weigh on ZAR sentiment.

At the time of writing the GBP/ZAR exchange rate is currently
trading at around ZAR19.2585, up around 0.5% from this morning’s opening

South African Rand (ZAR) Slumps as Risk Relief Rally Stalls

After trending higher in the mid-week on reports of a ‘significant
breakthrough’ in the development of a coronavirus vaccine, the South African
Rand (ZAR) has begun to relinquish its gains this morning.

This comes in part due to the World Health Organization
(WHO) playing down the reports regarding the vaccine, clarifying there are
currently ‘no known effective therapeutics’.

Experts also warn it will be months before any vaccine has made it through testing and is ready to be given to the public.

Further limiting the appeal of the Rand this morning are
ongoing concerns over state power utility Eskom.

Eskom announced on Wednesday that load shedding would remain
in place until at least Friday, with the rolling power cuts possibility
extending to the weekend as well.

The cash-strapped utility continues to struggle to meet South Africa’s power demands following the malfunction of a number of it generation units last month.

The frequent power cuts have put significant pressure on the
Rand so far in 2020 as ZAR investors fear they leave South Africa’s economy on
the brink of recession.

Upside in the Pound (GBP) Capped by Brexit Jitters

Whilst it is rallying against the South African Rand (ZAR)
this morning, the Pound (GBP) is struggling in wider trade as Sterling sentiment
is undermined by ongoing Brexit uncertainty.

Fears that the UK could face a no-deal Brexit at the end of
2020 have been reignited this week following a bullish speech from Boris
Johnson on Monday.

Speaking in London, Johnson called for a Canada-style free
trade agreement (FTA) between the UK and EU, stating that the UK should not
accept EU rules anymore that the EU should accept UK rules after Brexit.

Johnson as warned that he would be prepared to walk away
from negotiations and revert to World Trade Organization (WTO) terms if he can’t
secure the deal he wants.

Given the EU has repeated stated that any FTA would be dependent
on alignment with EU rules, GBP investors fear the two sides are on a collision
course which will ultimately see the UK face a cliff-edge Brexit in December.

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