The Pound South African Rand (GBP/ZAR) exchange rate made gains last week.
After a weak start, better-than-forecast UK inflation figures saw GBP/ZAR soar on Wednesday and maintain its highs throughout the rest of the week.
Meanwhile, downbeat reports from the Reserve Bank of South Africa (SARB) and short-notice load shedding likely weighed on the South African Rand (ZAR).
What’s Been Happening: Load Shedding and Floods Weigh Upon ZAR
The Pound (GBP) struggled to make headway at the beginning of last week following a sharp slowdown in UK economic growth. GDP slowed from 0.8% to 0.1%, missing forecasts of 0.3%.
Some troubling jobs data likely also kept pressure on Sterling on Tuesday. Real wage growth fell behind inflation whilst long-term sickness saw more people leaving the UK’s workforce.
Sterling made healthy gains on Wednesday, however. Inflation figures beat forecasts and hit their highest point in three decades off the back of high fuel, energy, and grocery prices. This in turn fuelled Bank of England (BoE) rate hike bets.
The South African Rand, meanwhile, saw reduced trading throughout the week. Tuesday’s monetary policy review from the SARB may have pushed the Rand lower, after the central bank highlighted the possibility of mounting price pressures.
The announcement of increased load shedding from utility supplier Eskom also weighed upon ZAR last week, as well as flooding across the country.
- South Africa Inflation Figures
Forecasts indicate a further climb in the country’s inflation figures for March. Will this prompt further interest rate hikes from the SARB?
- Bank of England (BoE) Speeches
The BoE has recently been dovish in the face of soaring inflation. Will Governor Andrew Bailey change his tone after last week’s CPI?
- UK PMIs
Output across all UK private sectors is expected to fall amid price inflation and the UK’s cost-of-living crisis.
Hawkish signals from the SARB and a worsening of the UK’s economic outlook could see the GBP/ZAR pair drop this week. Additionally, the Pound could be pushed lower if the BoE maintains its cautious approach.