GBP/ZAR Exchange Rate to Rally From Last Week’s Lows on SARB Rate Decision?

The Pound to South African Rand (GBP/ZAR) exchange rate tumbled to a three-month low last week, in response to some lacklustre UK economic data.

What’s Been Happening: Pound Undermined by Poor Data

The Pound found itself retreating against the South African Rand and the majority of its other peers last week, in the wake of some underwhelming UK data.

This was mostly centred on the UK’s latest GDP figures, which printed below expectations in May, dampening hopes for the v-shaped recovery in the UK economy.

While GBP investors welcomed a surprise acceleration in UK inflation, this was quickly offset by a mixed jobs report, leaving Sterling to close the week lower.

The Rand, meanwhile, enjoyed some notable support last week, as the emerging market currency was buoyed by reports of positive progress towards a coronavirus vaccine.

Three Things to Watch Out for This Week

1. SARB Rate Decision

In the spotlight this week will be the South African Reserve Bank’s (SARB) latest rate decision. Will cutting interest rates to a new record low weigh on the Rand later this week?

2. UK PMIs

For GBP investors the focus this week will be on the UK’s latest PMI figures, with the Pound set to rise if July’s preliminary figures reveal the private sector finally returned to growth after four consecutive months of contraction.

3. Brexit Headlines

Also likely to influence Sterling sentiment will be the latest round of Brexit negotiations. Expect to see the Pound come under pressure if the UK and EU remain deadlocked over the terms of a future trade agreement.

GBP/ZAR Forecast

Looking ahead, we expect the GBP/ZAR exchange rate to be met by fresh volatility this week as some notable data releases as well as ongoing coronavirus and Brexit uncertainty likely rock the pairing.

Matthew Andrews

Contact Matthew Andrews