Pound South African Rand (GBP/ZAR) Exchange Rate Firms amid SA Power Woes

Pound South African Rand Exchange Rate Nears Two-Week High

The Pound South African Rand (GBP/ZAR) exchange rate is firming again this morning. The pairing close to refreshing the two-week high struck yesterday.

At the time of writing the Pound South African Rand exchange rate is trading at around ZAR19.7312. Up roughly 0.4% from this morning’s opening rate.

South African Rand (ZAR) Slumps Amid Worst Power Cuts in Over Two Years

The South African Rand (ZAR) is currently reeling from South Africa’s worst power cuts in over two years.

Struggling state utility Eskom has struggled to keep the lights on this week. Implementing ‘stage 6’ load shedding as it wrestles with generation outages and a workers’ strike.

Stage 6 load shedding saw 6,000 megawatts removed from the system, the largest gap in energy generation since 2019.

It’s estimated that load shedding costs the economy ZAR100m in lost output per stage per day. Unsurprisingly this is taking its toll on the Rand this week. ZAR exchange rates plummeted roughly 1% on Tuesday when the stage 6 load shedding measures were first announced.

Reinforcing the Rand’s losses is a prevailing risk-off mood. Robust USD demand and global recession fears are further limiting the appeal of the emerging market currency.

Pound (GBP) Tempered by Gloomy BoE Outlook

The Pound (GBP) gains appear capped this morning amidst ongoing concern over the UK’s economic outlook.

The concerns were refresh on Wednesday following comments from Bank of England (BoE) Governor Andrew Bailey. Speaking with other central bankers at a European Central Bank (ECB) forum, Bailey warned the economy is facing a ‘very large real income shock.’

Bailey also cautioned that inflation in the UK is likely to remain higher for longer most other major economies.

While the BoE Governor said the bank is ready to ‘act more forcefully’ to combat inflation he did not commit to delivering more aggressive rate hikes in the future.

In fact, impending BoE policymaker Swati Dhingra even pushed back against calls to accelerate the BoE’s tightening cycle. Suggesting any approach to rate hikes should be ‘very gradual.’

Pound South African Rand Exchange Rate Forecast: Brexit Risks to Weigh on Sterling?

The Pound South African Rand (GBP/ZAR) exchange rate could relinquish ground at the end of this week as Brexit jitters continue to grow.

As the UK government pushes forward with its plan to alter the Northern Ireland protocol GBP investors are growing increasingly unnerved by the risk of a UK-EU trade dispute.

European Commission vice-president Maroš Šefčovič, has urged the UK to ‘get Brexit done’ and work with the EU to solve the protocol’s shortcomings.

Meanwhile, so long as load shedding persists the Rand is likely to struggle to attract support.

Matthew Andrews

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