The Pound South African Rand (GBP/ZAR) exchange rate stumbled through last week’s session amidst a sharp rise in commodity prices.
What’s Been Happening: South African Rand Bolstered by Soaring Commodity Prices
The South African Rand enjoyed strong support last week, with the emerging market currency being underpinned by rallying commodity prices.
This came amidst fears Russia might place restrictions on raw-material exports in response to a US ban on Russian oil.
But the Rand’s gains were tempered by the announcement from state utility Eskom that it would need to reintroduce scheduled power cuts as more generation units failed.
Meanwhile, the Pound was unable to offer much resistance against the Rand through most of last week as the absence of any notable UK economic data left Sterling mostly directionless.
Hopes for a negotiated end to the war offered some respite for GBP exchange rates on hopes an end to the conflict could help to alleviate inflationary pressures in the UK.
The UK then released its latest GDP figures at the very end of the week. Despite printing well above expectations were unable to offer any meaningful support for the GBP/ZAR exchange rate.
Three Things to Watch Out for This Week
- BoE Interest Rate Decision
In the spotlight this week will be the Bank of England’s (BoE) latest interest rate decision. With a rate hike largely priced in the focus will be on the BoE’s forward guidance. Could a more cautious outlook undermine the Pound?
- War in Ukraine
The situation in Ukraine is likely to continue to act as a key catalyst of currency movement this week. Will progress in peace talks weaken commodity prices and help to buoy the GBP/ZAR exchange rate?
- South African Retail Sales
For ZAR investors the focus this week is likely to be on the publication of South Africa’s latest retail sales figures. An acceleration of sales growth in January likely to reflect positively on the Rand.
Pound South African Rand Forecast
Trade in the Pound South African Rand exchange rate is likely to be dominated by the BoE’s interest rate decision on Thursday. Sterling is set to lose a key pillar of support if the bank adopts a more cautious outlook.