The Pound South African Rand (GBP/ZAR) exchange rate traded in a wide range last week, as a wave of violence swept through South Africa.
What’s Been Happening: Pound South African Rand Rocked by Violence
The South African Rand came under some heavy selling pressure through the first half of last week, as riots triggered by the arrest of former President Jacob Zuma spread throughout the country.
ZAR investors were unnerved by the potential damage the violence will have caused to South Africa’s already Covid-hit economy.
At the same time, the Pound was well positioned to take advantage of the pullback in the Rand, with the GBP/ZAR exchange rate being catapulted to a three-month high on the back of an impressive UK inflation release.
However, the pairing was unable to sustain its best levels, with Sterling faltering in the latter half of the week as a sharp rise in domestic coronavirus cases raised doubts over the sustainability of the UK’s reopening.
This offered the opportunity for the Rand to rally as the Army was brought in to help quell the unrest in South Africa.
Three Things to Watch Out for This Week
- Coronavirus Developments
A spike in global coronavirus cases is weighing heavily on market sentiment at the start of this week, and could potentially inject fresh volatility into the GBP/ZAR exchange rate.
- SARB Rate Decision
A key focus for ZAR investors this week will be the South African Reserve Bank’s (SARB) latest policy decision. Will a more cautious outlook from the bank weigh on the Rand?
- UK PMIs
Acting as a key catalyst for the Pound will likely be the publication of the UK’s latest PMI figures, with a robust expansion of the private sector this month potentially lending some support to Sterling.
Pound South African Rand Forecast
Looking ahead, the Pound South African Rand exchange rate may continue to trade in a wide range this week as the coronavirus resurgence looks set to rock the currency market.