Pound South African Rand Weekly Forecast: GBP/ZAR Exchange Rate Uncertain as Omicron Cases Rise

The Pound South African Rand (GBP/ZAR) exchange rate fell last week, despite the shock rate hike from the Bank of England (BoE), as Omicron weighed on the Sterling. Meanwhile, a more optimistic outlook in South Africa buoyed the South African Rand (ZAR). 

So far today, GBP/ZAR is rising after it hit an 11-day low yesterday amid worries that the UK may tighten Covid restrictions.  

What’s Been Happening: GBP/ZAR Falls despite BoE Rate Hike 

The Rand was mixed at the start of last week, but as the Federal Reserve’s interest rate decision loomed, ZAR began to slip. 

However, the US Dollar (USD) fell after the Fed’s hawkish decision. Investors seem to have bought the rumour of faster tapering and then cashed in on the confirmation. As a result, ZAR gained from USD’s weakness. 

Bar a post-BoE dip, the Rand then strengthened further. Reports from South Africa suggest that Omicron is less deadly than earlier waves of the virus, perhaps due to high natural immunity from previous infection. 

Meanwhile, GBP gained against ZAR early in the week as strong jobs data and a ten-year-high CPI boosted rate hike bets. 

The Pound then recovered some of its post-Fed losses as the BoE unexpectedly raised rates

However, Omicron concerns weighed heavily on Sterling. With cases rising rapidly, and evidence that Omicron is already denting the UK economy, GBP/ZAR fell to a one-week low. 

Three Things to Watch Out for This Week 

  1. Omicron 

The new Covid variant will likely continue to cause movement in GBP/ZAR, either by weighing on global risk appetite or due to country-specific developments. 

  1. UK GDP Growth Rate 

The UK’s final GDP growth figure could cause some movement if it surprises investors. 

  1. Commodities Prices 

With the South African Rand linked to commodities, any movements in the prices of raw materials may influence ZAR exchange rates. 

GBP/ZAR Forecast 

As we near Christmas, economic data is thin on the ground. Omicron news could therefore be the main driver of movement in the Pound South African Rand exchange rate. If things worsen in the UK or South Africa, the respective currencies could slip. 

Samuel Birnie

Contact Samuel Birnie


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