The Pound South African Rand (GBP/ZAR) exchange rate fell steadily last week amid the UK’s fuel supply crisis but managed to rebound on Monday as the situation stabilised. Will Sterling be able to hold its ground this week?
What’s Been Happening: GBP/ZAR Falls as Fuel Crisis Dents Sterling
The South African Rand (ZAR) firmed against the Pound (GBP) last week, as a number of positive data releases supported the currency.
South Africa’s M3 money supply and private sector credit reports both beat forecasts, rising by 2.31% and 1.12% respectively.
The country’s producer price index also exceeded expectations, as did its balance of trade figures, with the trade surplus widening to ZAR42.4bn in August versus the ZAR39bn predicted.
Meanwhile, the Pound softened against the Rand as the UK’s supply chain and energy crises weighed on GBP sentiment.
The UK experienced significant fuel outages across the country, while three more energy companies went bust amid soaring gas prices.
However, Sterling has managed to rally against the Rand so far this week as UK fuel supplies begin to stabilise. In addition, falling prices for mineral exports are denting the Rand, giving GBP/ZAR room to recover.
Three Things to Watch Out for This Week
- UK Supply Chain Crisis
While the UK’s fuel supply issues seem to be stabilising, the underlying supply chain crisis continues. If any new problems arise this week, Sterling could suffer.
- Commodities Prices
As a commodity currency, the Rand is particularly sensitive to the value of raw materials, so any fluctuations in the commodities market will likely affect GBP/ZAR.
- South Africa Business Confidence
South Africa’s business confidence indexes for August and September could boost the Rand on Friday as they are expected to show improving morale among the country’s business community.
With data thin on the ground for both currencies this week, GBP/ZAR is likely to be driven by commodities prices and domestic headlines. Signs of increased stress in China’s property market may weigh on raw materials, thereby giving Sterling the upper hand.