The Pound South African Rand (GBP/ZAR) exchange rate fell back again last week. The pairing striking a new one-month low amid ongoing UK political jitters.
What’s Been Happening: Pound South African Rand Subdued amid UK Political Jitters
The Pound got off to a poor start last week. Initially being pressured by a warning that thousands of UK small businesses might be at risk of collapse due to a sharp rise in costs.
A rebound in the GBP/ZAR exchange rate on Tuesday then proved short-lived. Sterling came under considerable pressure in the middle of the week amidst reports Rebel Conservative MPs might be close to being able to call a no-confidence vote against Boris Johnson.
The Pound was then left adrift through the latter half of the week. The closure of UK markets for the extended Jubilee weekend resulting in thin-trading conditions in Sterling.
Meanwhile, the Rand opened last week on a positive note. The appeal of the emerging market currency being buoyed by the easing of Covid restrictions in Shanghai and other Chinese cities.
A larger-than-expected drop in South Africa’s trade surplus in April then undermined the Rand on Tuesday.
However, elevated commodity prices allowed the Rand to find support again through the latter half of the week.
Three Things to Watch Out for This Week
- South African GDP
ZAR investors will be keeping a close eye on South Africa’s latest GDP release as they look to see how the economy fared amid the war in Ukraine, a spike in Covid cases and a surge in inflation.
- UK Politics
Despite hopes Monday’s no confidence vote would end questions over Boris Johnson’s future, the size of the rebellion continues to cast doubt over his premiership.
- Marker Sentiment
The lifting of more Covid restrictions in China has helped to cheer markets. Will this positive mood persist through the week and help to underpin the risk-sensitive Rand?
Pound South African Rand Forecast
The Pound South African Rand exchange rate may face further volatility amid the prospect of another week of elevated political uncertainty in the UK.