GBP/ZAR Exchange Rate Rocked by Fluctuating Market Sentiment

The Pound to South African Rand (GBP/ZAR) exchange rate was met by volatility last week, in response to fluctuating market sentiment.

What’s Been Happening: Mixed Market Sentiment Drives Volatility in GBP/ZAR

The Pound traded in a wide range against the South African Rand last week as shifting market sentiment infused volatility in the pairing.

However domestic data also played a key role, with the Rand plunging in the first half of the week in response to a collapse in South African consumer confidence in the second quarter, before rebounding following a broad sell-off of the US Dollar.

The Pound, meanwhile, got off to a strong start last week, being buoyed by Rishi Sunak’s announcement of a £30bn new stimulus package aimed at protecting UK jobs.

These gains were quickly erased in the second half of the week however, as the EU warned that ‘significant differences’ remained following the latest round of Brexit trade talks.

Three Things to Watch Out for This Week

1. UK Unemployment Figures

In the spotlight for GBP investors this week will be the UK’s latest jobs report. Will rising unemployment and a slump in wage growth in May, send the Pound lower later this week?

2. Brexit Headlines

Also continuing to influence Sterling will be any news coming out of the latest round of Brexit negotiations. Expect to see GBP exchange rates slip if the UK and EU remain deadlocked.

3. SA Inflation

For ZAR investors the focus this week is likely to be on South Africa’s latest CPI figures, with the Rand likely to face some volatility if another slide in inflation is seen as putting more pressure on the South African Reserve Bank (SARB).

GBP/ZAR Forecast

Looking ahead, we expect the GBP/ZAR exchange rate to continue to trade in a wide range this week as on top of the points listed above, the pairing is also likely to remain highly sensitive to coronavirus developments.

Matthew Andrews

Contact Matthew Andrews