GBP/ZAR – Forex

GBPZAR
Min Spread *
1000
Target Spread *
1000
Leverage/Margin
1:30
Commission
0
Swap point Long/Short
-312.74 / -290.00
Nominal Value of one lot
100 000
Trading hours
24 h

Instrument description

The Forex exchange rate for the Great Britain Pound in relation to the South African Rand is given by GBP/ZAR, where GBP is the base currency, and ZAR is the quote currency. The GBP is the fourth most traded currency in the world after the U.S Dollar, Euro, and Japanese Yen. The Great Britain Pound is the oldest currency and once recognized as the global currency up until 1940. The South African Rand was introduced in February, 1961.

The GBP/ZAR pairing is known as an exotic currency pair that can offer significant opportunity to the traders due to its high volatility. But the GBP/ZAR is considered a minor cross currency pair as it is not popularly traded in global Forex markets. The ZAR has a distinctive coding, where the 'Z.A.' stands for 'Zuid-Afrika,' which is the Dutch name for South Africa, and 'R' is for Rand. The word Rand holds importance as it symbolic of 'white waters ridge' in Johannesburg that contains large gold reserves.

The GBP/ZAR pair shows how many Rand will be required to buy one Pound. For example, if the current exchange rate of EUR/ZAR is 21.38, it indicates that 1 Pound is equal to 21.38 South African Rand; in other words, you would need 21.38 ZAR to buy 1 GBP. The quote of the GBP/ZAR pair mostly depends on the economic health of the U.K. and South Africa. But even with difficulty to predict and volatility, the GBP/ZAR pair can be a valuable tool to diversify an investment portfolio.

History of GBP/ZAR Currency Pair

The economy of the U.K. is quite developed and stable. The main sectors of the economy include manufacturing, tourism, and construction, while food products, financial, insurance, and legal services also contribute to the nation's income. The value of Great Britain Pound is usually managed by the Bank of England (BOE), which is one of the oldest banks in the world. The U.K. is the second biggest economy in Europe after Germany, and the U.K. is the eighth largest exporter of goods which includes food, beverages, tobacco, and chemicals.

The value of Pound has remained stable for many years, but it faced many fluctuations due to the global recession in 2008 and the U.K.'s decision to leave the European Union (E.U). The U.K. had the option to adopt the Euro as the official currency in 1999, but the Pound was retained as the official currency and continue to do so.

The economy of South Africa is quite small compared to the U.K. but South Africa is the most developed country in the African continent. The economy of South Africa is commodity-based as the country is filled with many reserves of natural resources that includes gold, copper, chromium, platinum, and diamonds. But being a commodity drive currency, the value of Rand depends on the prices of commodities on the global market.

The U.K. enjoys good trading relations with South Africa, and it is because English traditions have been a feature of South Africa's history, and both countries have a mutual respect and friendly ties. South Africa imports 0.63% of the total exports of the U.K., while the U.K. imports almost 5% of South Africa's total exports. The major component of Britain's exports to South Africa includes vehicles, machines, and boilers, while the exports of South Africa to Britain consists of precious gold, diamonds, chromium, and mineral ores.

How to Trade GBP/ZAR Pair

The GBP/ZAR is an exotic pair for trading with high volatility, less liquidity, and wide spreads. The Great Britain Pound represents a stable economy, while the South African Rand shows an emerging South African economy. The GBP/ZAR is traded 24/7 from Monday to Thursday. The trading is most active during the European sessions, which is between 06:00 and 16:00 GMT.

The ZAR can be used to perform a carry trade due to its high-interest rates, but among other options a popular way to trade GBP/ZAR pair is by using Contract for Difference (CFDs), which is a derivative financial instrument. Some traders may prefer CFDs as it gives them the option to use leverage where with a small initial deposit, they can have open a larger trading position. Also, with CFDs, there is no need to buy the currency, but speculation is done on the price change of the underlying asset. The traders have a chance of magnifying profits using CFDs, but there is also equal risk of considerable losses, so a risk management strategy may be considered.

The traders can also use CFDs and trade in both directions, which is either going long or short. If a trader thinks that the GBP would increase in value as compared to South African Rand, then he would go long or Buy, and similarly, if a trader believes that the Pound would decline against the South African Rand, then he would go short or sell.

How to read the Price Change in GBP/ZAR Pair

The GBP/ZAR pair is considered to be quite a volatile pairing, but it provides a vital opportunity for short term traders to speculate the price movements and try to profit. Once we study the price charts of the GBP/ZAR pair, we see that the value of ZAR was falling at the start of 2020, and the quote of GBP/ZAR was at 18.5 at the beginning of 2020. The GBP/ZAR traded between the ranges of 17.00 to 19.00 from mid-July 2019 to mid-January 2020. The highest value of the GBP/ZAR pair was recorded 23.388 on April 3, 2020, and the lowest value of 21.102 on June 10, 2020. Currently, GBP/ZAR pair trades on 21.378. The Bid price is 21.381, while the Asked price is 21.370.

If the exchange rate of GBP/ZAR rises, it means that GBP appreciates relative to ZAR, and if the GBP/ZAR rate falls, it means that the GBP depreciates in front of ZAR. If we analyze the historical values for the last five years, then the exchange rate of GBP/ZAR reached the highest value of 24.15 in December 2015 and the lowest value of 15.03 in June 2013.

What causes price change in GBP/ZAR pair?

As the GBP/ZAR pair is not a popular pair to trade, it becomes difficult for both short term traders and long term traders to accurately predict the price movements and direction of the market. But fundamental and technical analysis can be performed to know about the price changes, market direction, and market sentiments. The GBP/ZAR is a cross pair, which means there is an absence of U.S Dollar, but despite this factor, the USD is an important element as it impacts the currencies of both GBP and ZAR.

The main indicators that influence the GBP/ZAR pair include

  • Monetary policies and decisions taken by the Bank of England and the South African Reserve Bank (SARB)
  • The interest rates and inflation
  • Trade balances between the U.K. and South Africa; and
  • Other macro-economic factors such as Gross Domestic Product (GDP), Employment rate, and Consumer Price Index (CPI)

The GBP/ZAR can be traded for a short term period and allow traders the possibility to potentially profit. The growing Coronavirus pandemic is also impacting the value of ZAR as traders and investors are moving from a risky currency (South African Rand) to more safe-haven currency such as Japanese Yen. As the U.K. has a diversified economy, the GBP is set to recover more quickly and strengthen in value as compared to the ZAR, as the economy of South Africa is based on commodity and exports, which has suffered due to the worldwide coronavirus pandemic.

The information above is for education purposes only and cannot be considered as investment advice.

Available Forex CFDs on R1investing

Symbol Description Trading hours
EURUSD Euro vs. US Dollar 24H Buy Sell
GBPUSD Great Britain Pound vs. US Dollar 24H Buy Sell
EURGBP Euro vs. Great Britain Pound 24H Buy Sell
USDJPY US Dollar vs. Japanese Yen 24H Buy Sell
AUDUSD Australian Dollar vs. US Dollar 24H Buy Sell
NZDUSD New Zealand Dollar vs. US Dollar 24H Buy Sell
USDCHF US Dollar vs. Swiss Franc 24H Buy Sell
EURAUD Euro vs. Australian Dollar 24H Buy Sell
EURNZD Euro vs. New Zealand Dollar 24H Buy Sell
GBPAUD Great Britain Pound vs. Australian Dollar 24H Buy Sell
GBPJPY Great Britain Pound vs. Japanese Yen 24H Buy Sell
GBPNZD Great Britain Pound vs. New Zealand Dollar 24H Buy Sell
NZDJPY New Zealand Dollar vs. Japanese Yen 24H Buy Sell
USDHKD US Dollar vs. Hong Kong Dollar 10:00 - 18:00 Buy Sell
EURPLN Euro vs. Polish Zloty 10:00 - 19:30 Buy Sell
USDMXN US Dollar vs. Mexican Peso 8:00 - 20:00 Buy Sell
USDPLN US Dollar vs. Polish Zloty 10:00 - 19:30 Buy Sell
USDRUB US Dollar vs. Russian Ruble 10:00 - 18:00 Buy Sell
USDTRY US Dollar vs. Turkish Lira 9:00 - 19:00 Buy Sell
USDZAR US Dollar vs. South African Rand 9:00 - 20:00 Buy Sell
USDINR US Dollar vs. South India Rupee 05:00-13:30 Buy Sell
EURZAR Euro vs. South African Rand 09:00-20:00 Buy Sell
GBPZAR Great Britain Pound vs. South African Rand 09:00-20:00 Buy Sell
EURJPY Euro vs. Japanese Yen 24H Buy Sell
USDCAD US Dollar vs. Canadian Dollar 24H Buy Sell

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