The Pound was stuck in a downtrend against the Rand last week and extended losses as markets reopened on Monday.
The Rand has recorded gains across the board as risk appetite dipped on the weekend’s concerning US news.
Last week, the GBP ZAR exchange rate dipped from an initial high of 19.32 to a closing low of 18.42.
Pound Rallying as UK House Prices Stabilise
While little has come out in the way of UK data so far this week, the Pound has still managed to appreciate against most of its regular peers, barring the more dominant Rand.
This has been partly due to September’s Rightmove house price result on the month for September, which rose from -1.2% to 0.7%. On the year, a converse dip from 4.1% to 4% was seen.
This solid performance for the Pound comes in the wake of last week’s Bank of England (BoE) interest rate decision, which saw no change at 0.25% on the month.
The institution’s long term outlook was less Pound positive, however, with the BoE’s minutes clearly showing that at least one other UK interest rate cut could take place before the end of 2016.
South African Rand Jumps against the Pound after US Terror Incidents
The Rand has made a strong start to trading this week, having advanced notably against the Pound, Euro and US Dollar.
This comes in the absence of any direct South African domestic data; instead, the latest gains for the Rand have stemmed from US Dollar losses appeal following the weekend’s suspected terrorist incidents in Minnesota, New Jersey and New York.
Recent South African news on the global front has focused on controversial President Jacob Zuma, who has travelled to New York as part of a UN General Assembly.
Shortly after arriving, Zuma was quick to defend state-owned enterprises in South Africa, which have recently been under the consideration of ratings agencies which are thought to be contemplating downgrades.
GBP/ZAR Exchange Rate Forecast
This week, Pound Sterling/South African Rand exchange rate movement may occur as a result of Tuesday’s speech from BoE official Andrew Hauser, as well as Wednesday’s UK governmental borrowing figures for August.
Other UK announcements to watch out for will include September’s Confederation of British Industry (CBI) industrial trends for orders on Thursday, as well as the later speech from BoE official Jon Cunliffe.
From South Africa, the inflation rate for August is due on Wednesday, while Thursday will see the South African Reserve Bank (SARB) make its interest rate decision.
In brief, a sizable expansion into the deficit range is expected for the UK borrowing result, while the CBI figures are forecast to remain negative.
South Africa’s annual inflation rate prediction is for further growth at 6%, while the interest rate is forecast to be left at 7% on Thursday afternoon. Any surprising moves could trigger GBP ZAR volatility.