GBP/ZAR Weekly Forecast: Pound South African Rand Exchange Rate Hits Four-Week Low

The Pound South African Rand (GBP/ZAR) exchange rate has hit a four-week low today, as the risk-on mood that buoyed the Rand last week continues to support ZAR.

Sterling, however, remains subdued amid rising UK Covid cases and a lack of economic data.

What’s Been Happening: GBP/ZAR Tumbles on Risk-On Mood and UK Recovery Concerns

The South African Rand (ZAR) climbed steadily against the Pound (GBP) last week, as a growing market appetite for risk increased the appeal of the emerging-market currency.

The Rand then jumped on Friday following the speech from Federal Reserve Chair Jerome Powell at the Jackson Hole Symposium. Powell gave no timeline for Fed tapering, which saw the US Dollar (USD) slip and boosted riskier currencies, including the Rand.

Meanwhile, the Pound struggled through last week’s session, as rising UK Covid cases and concerns of a stalling economic recovery weighed on Sterling.

Worker and supply shortages caused by both Brexit and the coronavirus pandemic seem to be putting pressure on businesses, while consumer caution amid rising infections has led to lower spending.

As a result, Sterling slid against the Rand throughout last week, with GBP/ZAR hitting a four-week low this morning.

Three Things to Watch Out for This Week

  1. South Africa Balance of Trade

This afternoon, South Africa’s trade surplus for July is expected to have narrowed. Could the figure beat forecasts like it did in June?

  1. ABSA Manufacturing PMI

South Africa’s manufacturing PMI is predicted to improve slightly for August after slumping in July, and this could support the Rand.

  1. UK Final PMIs

After the flash figures disappointed GBP investors, any surprising results for the finalised manufacturing and services PMIs (out Wednesday and Friday, respectively) could move GBP/ZAR.

GBP/ZAR Forecast

Along with the above data releases, risk appetite will play a large part in the GBP/ZAR exchange rate. If market sentiment sours, the Pound may be able to regain some ground against the Rand.