The Pound to South African Rand (GBP/ZAR) exchange rate struck a new four-month high last week, amidst rising economic optimism in the UK.
What’s Been Happening: Pound Firms on UK Reopening Hopes
The Pound struck higher against the South African Rand last week, as Sterling sentiment was bolstered by hopes for a strong economic rebound in the UK this year.
This came on the back of Boris Johnson’s unveiling of his lockdown easing roadmap, which aims to see all coronavirus restrictions lifted by the summer.
However, the Pound’s success was also its undoing, as the currency was undermined by some profit taking in end of month trade.
Meanwhile, the Rand struggled to hold its ground last week in spite of the largely positive reaction to Finance Minister Tito Mboweni’s 2021 Budget, which walked the narrow path between supporting South Africa’s economic recovery and curbing its debt pile.
This slump in the Rand came mostly as a result of a souring of market sentiment in the latter half of the week, brought about by US stimulus doubts.
Three Things to Watch Out for This Week
- UK Budget
The main focus this week will, without a doubt, be the publication of Chancellor Rishi Sunak’s 2021 Budget. Will an expansion of the government’s fiscal stimulus help to boost the Pound, or could potential tax hikes drag Sterling lower?
- UK Services PMI
Also influencing GBP exchange rates this week will be the publication of the UK’s latest services PMI. This could see the Pound strengthen if February’s finalised figures are revised higher and sees the sector avoid contraction last month.
- Market Risk Appetite
In the absence of any notable ZAR data releases, the Rand is likely to remain driven by market sentiment, potentially leading to some weakness if a risk-off mood prevails once more.
Looking ahead, we could see the GBP/ZAR exchange rate infused with some volatility this week, depending on what the Chancellor announces in his budget.