Pound South African Rand Exchange Rate Weekly Forecast: GBP/ZAR Slumps on UK Political Uncertainty

The Pound South African Rand (GBP/ZAR) exchange rate has ticked higher at the start of this week amid a prevailing risk-off mood.

What’s Been Happening: Pound South African Rand

The GBP/ZAR exchange rate initially strengthened last week. The Rand gave ground as state utility Eskom implemented scheduled power cuts.

However, these gains proved short lived. Sterling faltered on Tuesday amid fresh concern over the UK’s economic trajectory.

The Pound then fluctuated with the release of the UK’s consumer price index. This saw Bank of England (BoE) rate hike bets dented by a modest acceleration in inflation.

Meanwhile, South Africa’s own CPI figures lifted the Rand as they bolstered expectations the South African Reserve Bank (SARB) will continue to raise interest rates.

Fresh risk aversion saw the Rand falter in mid-week trade, while Sterling strengthened on the back surprisingly robust UK PMIs.

However, the Pound then tumbled at the end of the session. Sterling was initially undermined by a contraction in UK retail sales.

These losses were then compounded by fresh political uncertainty. Defeat for the Conservatives at two byelections raised fresh questions over the future of Boris Johnson’s premiership.

Three Things to Watch Out for This Week

  1. BoE Bailey Speech

A speech from BoE Governor Andrew Bailey may act as the primary catalyst for the Pound this week. GBP investors will be looking to Bailey to shed more light on the bank’s future policy.

  1. UK GDP

The final release of the UK’s first quarter GDP figures may also impact Sterling. Could a downward revision to growth dent GBP exchange rates?

  1. South African Trade Figures

For ZAR investors the focus this week is likely to be on South Africa’s latest trade figures. An expansion to the country’s trade surplus last month may buoy the Rand.

Pound South African Rand Forecast

The Pound South African Rand exchange rate will also remain sensitive to UK political developments this week. Concerns are likely to be centred around the government’s push to alter the Northern Ireland protocol.

Matthew Andrews

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