The Pound South African Rand (GBP/ZAR) exchange rate struck higher last week, in response to growing concerns over the resilience of South Africa’s economic recovery.
What’s Been Happening: Pound South African Rand Surges on SA Economic Worries
The South African Rand fell back last week, as analysts expressed concerns over the strength of South Africa’s economic recovery.
South Africa has weathered the pandemic fairly well but ZAR investors fear that underlying weakness in the country’s economy could scupper its recovery this year.
Alongside a softening of risk appetite at the end of the week, this left the Rand without any clear support last week.
Meanwhile, the Pound got off to a strong start last week on the back of some economic optimism and data showing that retailers in the UK enjoyed their sharpest upturn in sales volumes since 2018, last month.
However, Sterling sentiment soured somewhat in mid-week trade following the news that the UK’s Electoral Commission would be launching a formal inquiry into how Boris Johnson funded the refurbishment of his Downing Street flat, although the resulting political uncertainty this wasn’t enough to prevent GBP/ZAR rebounding at the end of the week as the Rand fell.
Three Things to Watch Out for This Week
- BoE Rate Decision
Acting as the main catalyst of movement in the Pound South African Rand exchange rate this week will be the Bank of England’s latest rate decision, no policy changes are expected from the bank this month, but Sterling could be propelled higher if the BoE upgrades its growth forecasts.
- Scottish Election
Also influencing GBP exchange rates will be the Scottish Parliamentary election, as another majority for the SNP is likely to bolster the party’s cases for a second independence referendum.
- South African Business Confidence
For ZAR investors the only release of note this week will be South Africa’s latest business confidence figures, which could weigh on the Rand if morale weakened again last month.
Pound South African Rand Forecast
Looking ahead, Pound South African Rand exchange rate may extend its recovery this week, if the BoE strikes a hawkish tone.