GBP/ZAR Weekly Forecast: Pound South African Rand Exchange Rate Firms on Strong Jobs Data

The Pound South African Rand (GBP/ZAR) exchange rate is currently climbing, after the UK posted some strong employment data this morning. 

The unemployment rate for July dropped to 4.6%, while the claimant count change in August and the employment change in June both beat forecasts, suggesting a strong labour market in the UK. 

What’s Been Happening: GBP/ZAR Fluctuates amid Shifting Market Mood 

The South African Rand (ZAR) gained against the Pound (GBP) early last week, despite a risk-off mood and a larger-than-expected drop in business confidence for the third quarter of this year, thanks to rising commodities prices boosting the emerging-market currency. 

The Rand then dipped on Thursday evening as a surge in the Pound pushed GBP/ZAR higher, despite an increase in risk appetite among investors. Still, ZAR managed to hold on to some of last week’s gains as we moved into this week.  

Meanwhile, the Pound stumbled early last week as concerns over the UK’s controversial decision to raise national insurance rates and renewed Brexit tensions weighed on Sterling.  

GBP exchange rates rallied following some hawkish comments from Bank of England (BoE) Governor Andrew Bailey but wavered towards the end of the week as UK GDP in July stalled at 0.1%. 

Yesterday saw GBP/ZAR slip as risk appetite grew and Sterling struggled amid a lack of data, before rallying today. 

Three Things to Watch Out for This Week 

  1. UK Inflation Rate 

The Pound could find support on Wednesday as UK inflation is expected to hit 2.9%, which may spark taper talk from the BoE. 

  1. South African Retail Sales 

South African retail sales are forecast to have shrunk by 0.3% month-on-month in July, and this could create a headwind for the Rand. 

  1. UK Retail Sales 

However, UK retail sales aren’t expected to be much better. With a mere 0.5% expansion forecast after July’s 2.5% slump, Sterling could end the week on a bad note. 

GBP/ZAR Forecast 

GBP/ZAR could strengthen through the first part of the week, surging if inflation hits the expected high, but poor retail sales could see it relinquish some gains on Friday. That said, risk appetite and domestic events may introduce some volatility to the pair. 

Samuel Birnie

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