After slipping over the course of last week, the GBP ZAR currency pair opened Monday’s session close to a multi-year low, with the interbank rate touching 16.49.
Pound Unstable with Carney’s Future Called into Question
The week began with GBP losses owing to the possibility of Bank of England (BoE) Governor Mark Carney leaving his post in the near-future.
The belief that Carney may opt to bow out before the end of his term comes in response to criticism about the recent central bank decisions from key government officials like Prime Minister Theresa May.
The concern has been that such a resignation would cause mass GBP instability, mainly because changes of governance rarely sit well with stability-desiring investors.
South African Rand Rallies as Zuma Tries to Block Corruption Report
The Rand, meanwhile, has started the week on a stronger footing thanks to the latest political news from South Africa.
In yet another attempt to remove corruption-mired ANC President Jacob Zuma from power, the Public Protector (a government conduct watchdog) has investigated possible improper affairs between senior officials and the famously wealthy Gupta family.
Zuma has asked the South African courts to find the investigation unlawful, which has raised the question of why the President is so eager to stop the report from seeing the light of day.
Should he be proven guilty of the allegations, Zuma could well find himself out of the top spot, which may prompt a Rand uptrend due to hopes of stable future governance.
Further support for the Rand has come from the news that Finance Minister Pravin Gordhan will not be facing fraud charges, which has boosted optimism in South Africa’s financial management.
GBP/ZAR Forecast
This week, Pound Sterling/South African Rand exchange rate movement may occur as a result of the UK’s manufacturing, construction and services PMIs, as well as the Bank of England (BoE) interest rate decision due on Thursday.
If the PMIs decline in October, as expected, the Pound is likely to be pressured lower. Additional GBP losses may occur if the BoE adopts a dovish tone on Thursday and indicates that another interest rate cut is on the horizon.
South African news will include Tuesday’s unemployment result for Q3 as well as the Standard Bank PMI on Thursday.
Unemployment is expected to dip from 26.6% to 26.4%, while the PMI has a rise from 50.7 to 51 forecast.