The Pound South African Rand (GBP/ZAR) exchange rate wavered last week as the Bank of England (BoE) delivered its second consecutive interest rate hike.
What’s Been Happening: GBP/ZAR Mixed as BoE Hikes Rates
The Pound initially stumbled last week, after the initial release of the Sue Gray inquiry into the Downing Street ‘partygate’ raised fresh doubts over Boris Johnson’s premiership.
Sterling quickly found its feet again in anticipation of a rate hike from the BoE. Which the Central Bank dutiful delivered on Thursday.
The news that four members of the Monetary Policy Committee (MPC) voted for a largely-than-expected hike initially caused GBP exchange rates to spike.
However, these gains quickly faded again as BoE Governor Andrew Bailey said it would be wrong for markets to ‘assume that rates are now on an inevitable long march upwards.’
Meanwhile, the South African Rand (ZAR) was rocked by an announcement from Eskom, in which the state utility outlined plans to implement several days of load shedding.
The South African economy is estimated to lose roughly ZAR700million per day in lost output due to these scheduled power cuts, so the news weighed heavily on the Rand.
Three Things to Watch Out for This Week
- UK GDP
A key focus for GBP investors this week will be on the UK’s latest GDP release. Will resilient growth in the fourth quarter bolster the Pound?
- UK Political Jitters
Political developments in the UK will also continue to influence the GBP/ZAR exchange rate this week. Sterling is likely to fall if pressure on Boris Johnson continues to grow.
- Eskom Load Shedding
Eskom announced it will implement further load shedding at the start of this week. The Rand is likely to fall if this is extended again.
GBP/ZAR Rand Forecast
The GBP/ZAR exchange rate may trade in a wide range again this week. SA President Cyril Ramaphosa’s 2022 State of the Nation Address may infuse additional volatility into the pairing.