Pound South African Rand Weekly Forecast: GBP/ZAR Exchange Rate to Stay Strong as Omicron Uncertainty Persists

The Pound South African Rand (GBP/ZAR) exchange rate surged to a 13-month high last week as the emergence of the new Omicron Covid variant hit the risk-sensitive Rand particularly hard. 

What’s Been Happening: GBP/ZAR Surges on Omicron Variant 

GBP/ZAR traded sideways for most of last week as a strong US Dollar (USD) limited the South African Rand (ZAR). 

The Rand then tumbled overnight on Thursday as reports of the Omicron variant emerged. Traders jettisoned riskier assets and emerging-market currencies, such as the Rand, in favour of safer investments. 

As the new Covid strain was identified in South Africa, ZAR fell particularly sharply. Governments introduced travel restrictions on flights to and from southern Africa, adding to the Rand’s woes. 

Meanwhile, the Pound was also flat through most of the week, despite some strong economic data, as Brexit tensions weighed on Sterling. 

Judging from negotiators’ comments, talks over the Northern Ireland protocol remained deadlocked. 

In addition, Anglo-French relations soured further, with France rescinding Priti Patel’s invitation to a meeting about the Channel boat crisis. These issues may have limited the Pound’s upside at the end of the week. 

This week, GBP/ZAR has eased off its 13-month high but is holding strong as markets remain anxious. 

Three Things to Watch Out for This Week 

  1. Omicron Variant News 

Markets are jumpy at the moment, reacting sharply to any news about the new variant. Expect more movement in GBP/ZAR as we learn more about Omicron. The bigger the threat, the weaker the Rand. 

  1. South Africa PMIs 

Economists expect South Africa’s PMIs for November to improve slightly, which may bolster ZAR somewhat. 

  1. BoE Speeches 

With the Omicron variant dampening rate hike bets, GBP investors may be even more attentive to hints about policy from Bank of England (BoE) officials. 

GBP/ZAR Forecast 

As worries over the new Covid variant are unlikely to subside any time soon, and with South Africa hit by international travel restrictions, GBP/ZAR may hold near highs this week. 

Samuel Birnie

Contact Samuel Birnie


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