Pound South African Rand Exchange Rate Jumps to Four-Month High

The Pound South African Rand (GBP/ZAR) exchange rate is trading with modest gains so far this week, refreshing the four-month high struck during last week’s session.

What’s Been Happening: Pound Jumps as Boris Johnson Resigns

The Pound South African Rand initially got off to a slow start last week. Sterling remaining muted as the Bank of England’s (BoE) Financial Stability Report painted a bleak outlook for the UK economy.

The focus swiftly shifted to UK politics as the resignation of two senior cabinet members kicked off a turbulent 48 hours. Culminating in Boris Johnson’s resignation as Prime Minister.

Johnson’s resignation propelled Sterling higher as it helped to bring an end to months of uncertainty over his premiership.

Hawkish comments from BoE policymaker Catherine Mann the reinforced these gains at the end of the week.

Meanwhile, the Rand held its ground at the start of last week. Reports Eskom had struck a wage deal with striking workers bolstered hopes the country’s power crisis may soon be resolved.

However a prevailing risk-off mood saw the Rand then stumble through the latter half of the week.

Three Things to Watch Out for This Week

  1. UK Politics

GBP exchange rates may continue to be influenced by UK political developments this week. The start of the Conservative leadership race likely creating fresh political uncertainty and limiting the Pound’s upside potential.

  1. UK GDP

Also in focus for GBP investors will be the UK’s latest GDP figures, with Sterling likely to weaken if growth stalled as forecast in May.

  1. South African Retail Sales

The publication of South Africa’s latest retail sales figures could offer some support for the Rand this week. Economists forecast sales growth will have rebounded in May.

Pound South African Rand Forecast

The Pound South African Rand exchange rate may trade with a degree of volatility this week. Fluctuating amid the uncertainty created by the Tory leadership contest.

Matthew Andrews

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