GBP/USD has been advancing amid bond-related dollar weakness and BOE hawkishness. Concerns around coronavirus and Brexit may cause a downside correction.
January 13, 2021 - Written by Ben Hughes
Despite the Pound rebounding as negative interest rate bets fade, the British Pound to South African Rand (GBP/ZAR) exchange rate is struggling for direction this week. The Pound is unable to sustain much further gains against the South African Rand, as the Rand rebounds from weeks of huge losses. Still, if the Rand rebound runs out of steam there may be more gains ahead for the pair.
Following last week’s jump from the level of 20.11 to 20.75, GBP/ZAR has continued to trend with an upside bias this week.
Yesterday, GBP/ZAR touched on a high of 21.09. This was the best level for GBP/ZAR in over two months, since the end of October.
On January 1, Britain left the European Union and is already paying a heavy price, in loss of business to the City of London and a sharp fall in trade with Europe and Ireland.
Last week Bank of England Governor Andrew Bailey said that the trade deal stuck with the EU in December would end up costing the UK economy more than 80 billion pounds. In the long term, the country’s GDP will be up to four per cent lower than if it had remained in the EU, he said.
In the City of London, the first impact was the loss of six billion euros in euro-denominated daily trading to Paris and Amsterdam. In the months up to December 31, the City lost an estimated 1.2 trillion euros in assets and 7,500 jobs to Frankfurt, Paris, Dublin and other financial centres.