The Pound South African Rand (GBP/ZAR) exchange rate jumped last week, as a prevailing risk-off mood weighed heavily on the Rand.
What’s Been Happening: Pound South African Rand Pummeled in Risk-Off Trade
The South African Rand came under some significant selling pressure through last week’s session, as a notable slump in market risk appetite saw investors shun the emerging market currency.
This came amidst concerns over rising global coronavirus cases, as well as fears over the prospect of the Federal Reserve tapering its stimulus programme at a time when cases are on the rise.
Meanwhile, tempering the Pound’s gains against the Rand last week were some underwhelming UK data releases, with inflation and retail sales printing below expectations in July and dampening hopes the Bank of England (BoE) may start tightening its monetary policy in the near-term.
Further limiting the appeal of Sterling in the latter half of the week was also a worrying rise in new UK coronavirus cases.
Three Things to Watch Out for This Week
- Coronavirus Developments
Both GBP and ZAR investors are likely to keep a close eye on domestic coronavirus developments over the coming week, with both currencies likely to face some headwinds if local cases start to rise.
- CBI Distributive Trades
The only notable UK data release this week will be the Confederation of British Industry’s latest distributive trades index. This could weaken Sterling sentiment if it reports retail sales volumes slowed again in August.
- South African Unemployment Figures
For ZAR investors the primary focus this week will be South Africa’s latest unemployment figures, which could put some pressure on the Rand if they report domestic unemployment climbed again in the second quarter.
Pound South African Rand Forecast
Looking ahead, the Pound South African Rand exchange rate could be infused with volatility this week as coronavirus headlines likely act as key catalysts for both currencies.