Pound South African Rand Weekly Forecast: GBP/ZAR Exchange Rate on Track for More Volatility?

The Pound South African Rand (GBP/ZAR) exchange rate fluctuated last week but managed to regain ground overall as the UK’s fuel crisis came to an end.

What’s Been Happening: GBP/ZAR Wavers on Shifting Market Mood

The South African Rand (ZAR) slumped against the Pound (GBP) at the beginning of last week, as a risk-off market mood dented demand for the emerging-market currency.

ZAR managed to firm on Wednesday as the market mood improved, but an ongoing metalworkers’ strike limited the upside.

Unexpected drops in business confidence for August and September then saw the Rand slip against Sterling on Monday of this week, despite GBP facing headwinds of its own.

Meanwhile, the Pound gained ground last Monday as the UK’s fuel crisis subsided. The government deployed military drivers to replenish forecourts and fuel supplies began to stabilise.

Sterling then dipped mid-week following news that two-thirds of UK manufacturers expect to increase prices over the next few months. With inflationary pressures squeezing margins, businesses are forced to pass costs on to consumers.

GBP/ZAR gained a boost early this week after some hawkish comments from Bank of England (BoE) policymaker Michael Saunders over the weekend, which, despite economic headwinds for the UK, supported Sterling through Monday’s session.

Three Things to Watch Out for This Week

  1. UK GDP

The UK’s GDP is expected to have expanded by 0.5% in August. However, July’s reading fell far short of forecasts. Could this week’s report also disappoint?

  1. SA Retail Sales

Domestic sales in South Africa are forecast to have contracted again in August. If the figures print as expected, this could dent the Rand.

  1. UK Economy

With the UK’s supply chain and energy crises causing concern in recent weeks, any negative economic headlines could dent GBP.

GBP/ZAR Forecast

Looking ahead, GBP/ZAR could witness more volatility this week. With commodity prices and risk appetite fluctuating, and Sterling strongly affected by domestic news, the Pound South African exchange rate could trade in a wide range.

Samuel Birnie

Contact Samuel Birnie