Pound South African Rand Weekly Forecast: GBP/ZAR Exchange Rate to Remain Volatile amid Omicron Uncertainty?

The Pound South African Rand (GBP/ZAR) exchange rate lost ground last week as Omicron fears eased, although jitters around the variant caused some volatility. 

So far this week GBP/ZAR has dropped, with investors increasingly upbeat about the new coronavirus strain. However, a larger-than-expected contraction in South African GDP may weigh on ZAR. 

What’s Been Happening: GBP/ZAR Slips as Omicron Fears Ease 

The South African Rand (ZAR) rallied early last week as fears over the Omicron variant eased somewhat. In addition, better-than-expected results in South Africa’s unemployment rate and balance of trade reports also boosted the Rand. 

ZAR exchange rates then wavered through the week as markets remained jumpy, adjusting to Omicron fears and announcements from officials at the Federal Reserve, who hinted at a faster tapering cycle

The Rand ended the week higher. However, it lost most of its earlier gains amid a strengthening US Dollar (USD). 

Meanwhile, the Pound struggled as the Omicron variant reduced the likelihood of a Bank of England (BoE) rate hike this year. BoE policymaker Catherine Mann said on Tuesday that even talking about a rate rise was ‘premature’. 

Sterling then struggled for direction through much of the week amid positive investment news, mixed data and cautious comments from the BoE Governor, Andrew Bailey. 

More dovish remarks capped GBP’s upside against ZAR on Friday as Michael Saunders – one of the BoE’s most hawkish members – expressed doubt about a rate hike this month. 

Three Things to Watch Out for This Week 

  1. Omicron News 

With Omicron very much still in the spotlight, traders may remain jumpy. If the outlook continues to improve, the Rand could strengthen. 

  1. SA Retail Sales 

ZAR could also get a boost from South Africa’s retail sales, which economists expect to have increased by 4.2% in October. 

  1. UK GDP 

Sterling may find some support at the end of the week. Forecasts suggest that UK GDP grew by 0.4% in October. 

GBP/ZAR Forecast 

As the new Covid variant continues to cause uncertainty, GBP/ZAR looks set for another week of volatility. 

Samuel Birnie

Contact Samuel Birnie


Related
Do Not Sell My Personal Information