The Pound South African Rand (GBP/ZAR) exchange rate has retreated from a two-week high this morning, in response to concerns over a delay to the UK’s reopening date.
What’s Been Happening: Pound South African Rand Rallies amid bearish trading conditions
The South African Rand was placed on the defensive for much of last week as bearish trading conditions saw investors largely shun the emerging market currency.
This slump also came in spite of South Africa’s latest GDP figures, which reported a larger-than-expected expansion of domestic growth in the first quarter of 2021.
While the GBP/ZAR exchange rate made steady gains last week, elsewhere the Pound came under some notable pressure, with initial losses coming from comments from Health Secretary Matt Hancock hinting at a possible extension to lockdown measures in England.
Also stoking volatility in Sterling were renewed Brexit tensions between the UK and EU ahead of the G7 summit, following the failure of the two sides to resolve their dispute over the Northern Ireland protocol in talks on Wednesday.
Three Things to Watch Out for This Week
- UK Reopening Delay
Boris Johnson’s decision to delay the 21 June reopening date has already put some pressure on the Pound this week, and may limit the upside in the currency going forward.
- UK Inflation Rate
Also influencing GBP exchange rates will be Wednesday’s publication of the UK consumer price index, with another acceleration of inflation potentially boosting Sterling.
- South African Retail Sales
The only ZAR data release of note this week will be South Africa’s latest retail sales figures. Will a sharp rebound in sales growth last month help to revive demand for the Rand?
Pound South African Rand Forecast
Looking ahead, the Pound South African Rand exchange rate may face an uphill battle this week as the delay to England’s reopening is likely to weigh on Sterling sentiment throughout the session.