The Pound South African Rand (GBP/ZAR) exchange rate traded in a wide range last week, mostly as a result of UK political uncertainty.
What’s Been Happening: Pound South African Rand Fluctuates on UK Political Developments
The Pound was infused with significant volatility at the start of last week. This came as Boris Johnson narrowly survived a no-confidence vote.
Sterling initially benefitted from hopes a victory for Johnson would help to quash questions over his leadership. However his poor performance ensured the future of his premiership would remain in doubt.
UK growth warnings from the Organisation for Economic Co-operation and Development (OECD) and British Chambers of Commerce (BCC) then pushed the Pound lower in mid-week trade.
Meanwhile the Rand opened the week on strong footing. ZAR exchange rates were buoyed by a surprising strong domestic GDP release.
However the Rand relinquished a good portion of these gains in the second half of the week. ZAR investors being unnerved by reports of fresh Covid lockdowns in China.
The GBP/ZAR exchange rate then rallied at the end of the week. A clear risk-off mood undermining the Rand.
Three Things to Watch Out for This Week
- BoE Rate Decision
The Bank of England’s (BoE) latest interest rate decision will be the primary focus this week. While the BoE is expected to raise rates again, will some dovish forward guidance push the Pound lower?
The EU is set to launch legal action in response to the UK government’s plan to unilaterally alter the Northern Ireland protocol. Will the risk of a possible UK-EU trade war sap Sterling sentiment?
- South African Retail Sales
For ZAR investors the focus will be on the release of South Africa’s latest retail sales figures. An expected rebound in sales growth in April may help to buoy the Rand.
Pound South African Rand Forecast
The Pound South African Rand exchange rate may continue to trade erratically this week. The BoE’s interest rate decision and Brexit developments potentially infusing the pairing with fresh volatility.