GBP/ZAR Rises Amid COVID-19 Drug Trial
GBP/ZAR rises as the UK government extends lockdown in the country. The exchange rate rose by 0.5% on Friday morning.
Risk appetite boosted the pound on reports of successful COVID-19 drug trial and plans to open up the U.S. economy.
Hopes for a successful coronavirus treatment was unable to boost the Rand. It was left under pressure in forex after a surprise interest rate cut.
Optimism about a treatment for the pandemic offset weak economic data from China. It showed the economy contracted for the first time since records began almost 30 years ago.
Moh Siong Sim, currency analyst at the Bank of Singapore said it’s a divided feeling. Between being anxious about the economic freeze and the hope that things might be re-starting quite soon.
‘He said we’re stuck in that limbo zone. But it does seem that the number of infections may have hit a peak at a global level. And if we find a cure, then there will be a cure for the economy as well.
In addition, the British government announced it would extend the current lockdown for at least three more weeks.
For GBP/ZAR, this announcement offered Sterling further support, allowing it to rise against the Rand.
The Coronavirus Continues To Be the Main Driver for GBP/ZAR
Meanwhile, forex news reports President Donald Trump’s announcement about re-opening the US economy further boosted risk appetite.
On Thursday, President Donald Trump outlined guidelines allowing US states to emerge from the current lockdowns in a staggered approach. The process will be dependent on strict virus testing and individual state discretion.
The president said they are not opening all at once, but one careful step at a time.
However, while this boosted risk appetite and supported the Rand, traders were still wary. This was after yesterday’s US employment data showed over 20 million Americans had lost their jobs.
Locally, there was anticipation of a government announcement on deeper fiscal stimulus to help limit damage. Despite this, traders remained optimistic during Friday’s forex trading.
According to Investec analysts, the Rand is already trading in deeply oversold territory. And selling the up-ticks will still be favored if one believes that the dollar is also due an extended slide.
Looking ahead, COVID-19 is likely to continue to be the main driver of the GBP/ZAR exchange rate. It is possible for risk appetite to continue improving next week as further information is released about COVID-19 drug trial.
Rand traders better shrug off earlier worries following the shock interest rate cut. For GBP/ZAR, it could be possible for South African currency to edge higher against the Pound next week.
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