The Pound South African Rand (GBP/ZAR) exchange rate was rocked last week by the Bank of England’s (BoE) alarming economic forecasts.
What’s Been Happening: Pound South African Rand Rocked by BoE’s Grim Forecasts
The Pound was met by considerable selling pressure last week as GBP investors were spooked by the BoE’s latest economic forecasts.
The BoE suggested that inflation could reach 10% by the end of the year, whilst also warning there is a clear risk of the UK falling into a recession.
This offset the surprisingly hawkish split in the Monetary Policy Committee’s vote for a 0.25% interest rate hike, with three members pushing for an immediate 0.5% raise.
Meanwhile, fluctuating risk appetite infused notable volatility in the South African Rand last week.
The Rand pushed higher in the middle of the week. Following a drop in the US Dollar in the wake of the Federal Reserve’s latest interest rate decision.
These gains were then swiftly reversed as the Rand got caught up in a wider selloff. With Equity and currency markets plunging in the second half of the week.
Three Things to Watch Out for This Week
- Market Sentiment
The Pound South African exchange rate may continue to trade with a high degree of volatility this week as concerns over the conflict in Ukraine and lockdowns in China are likely to result in uneven trading conditions.
- UK GDP
For GBP investors the primary focus this week will be on the UK’s latest GDP figures. Will underwhelming growth figures undermine demand for the Pound?
- South African Manufacturing Data
The release of South Africa’s latest manufacturing production figures will be the only ZAR data of note this week. Will a rebound in factory output in March reflect positively on the Rand?
Pound South African Rand Forecast
The Pound South African Rand exchange rate likely faces another week of uneven trade. Persistent risk-off flows and lingering concerns over the UK economy are likely to remain prominent.