Pound South African Rand Weekly Forecast: GBP/ZAR Exchange Rate to Dip on SA Balance of Trade?

The Pound South African Rand (GBP/ZAR) exchange rate has firmed this morning, as South Africa’s state energy utility has extended planned power outages and market sentiment has soured.

What’s Been Happening: GBP/ZAR Strengthens amid South African Power Outages

The South African Rand (ZAR) initially climbed last week, as the rising cost of raw materials boosted the commodity-linked currency.

However, South Africa’s energy crisis dented the Rand for the rest of the week, as state utility firm Eskom implemented scheduled power cuts due to a shortage of generation capacity.

This week, ZAR has regained some of its losses thanks to a risk-on market mood but currently seems to be trending downwards again.

Meanwhile, the Pound (GBP) fell last Monday as gas prices began to soar again. Hopes that Russia would increase gas exports to Europe faded, renewing concerns about the UK’s energy crisis.

Sterling firmed through the rest of the week, despite mixed data releases, as expectations of an imminent Bank of England (BoE) rate hike underpinned the currency.

A lack of UK data on Monday left GBP/ZAR open to losses, while rising Covid cases and economic concerns reduced the likelihood of a rate hike at the BoE’s next meeting, thereby weakening Sterling.

Three Things to Watch Out for This Week

  1. UK Autumn Budget

The UK’s autumn budget comes at an uncertain time in the UK’s economic recovery. We could see some volatility in the Pound as markets digest the Chancellor’s plans.

  1. SA Balance of Trade

South Africa’s trade surplus is forecast to have risen to ZAR48bn in September, which could boost the Rand.

  1. Energy Crisis

The global energy crisis has affected both GBP and ZAR in recent months. Any negative headlines from the UK or South Africa will likely dent the respective currency.

GBP/ZAR Forecast

The GBP/ZAR pair may experience some volatility this week, particularly due to the autumn budget and South Africa’s energy issues. If South Africa’s balance of trade prints as forecast on Friday, then ZAR could end the week on a high note.

Samuel Birnie

Contact Samuel Birnie