Pound South African Rand Exchange Rate Weekly Forecast: GBP/ZAR Slumps Following SARB’s Shock 75bps Rate Hike

The Pound South African Rand (GBP/ZAR) exchange rate fluctuated last week. The pairing’s initial gains being reversed following the South African Reserve Bank’s (ZAR) latest interest rate decision.

What’s Been Happening: Rand Rallies on SARB’s Aggressive Rate Hike

The Pound South African Rand exchange rate got off to a strong start last week. Bank of England (BoE) rate hike speculation helping to bolster Sterling.

GBP exchange rates then stalled with the release of the UK’s latest jobs figures, after they reported a record drop in real pay.

The UK’s consumer price index then saw the Pound retreat in the middle of last week. Although the release of South Africa’s own inflation figures helped to cut these losses.

A surprisingly aggressive interest rate hike from the SARB then turbocharged the Rand in the second half of the week. The SARB shocked markets by raising rates by 75bps against forecasts for a more modest 50bps hike.

The GBP/ZAR exchange rate then wavered at the end of the week after a disappointing UK retail sales print, offset some surprisingly robust PMI releases.

Three Things to Watch Out for This Week

  1. UK Politics

The Pound could struggle to attract support this week as a lull in GBP data will likely see UK political jitters drive Sterling sentiment. With the uncertainty of the Conservative leadership election likely to drag on GBP exchange rates.

  1. South African Trade Figures

South Africa’s latest trade figures could bolster the Rand later this week, if the nation’s trade surplus expanded in line with expectations last month.

  1. Fed Interest Rate Decision

Also of note to ZAR investors will be the Federal Reserve’s latest interest rate decision. As another aggressive rate hike from the US central bank will place more pressure on South Africa’s economy.

Pound South African Rand Forecast

In addition to the data mentioned above, the Pound South African Rand exchange rate is also likely to remain sensitive to market sentiment. With the pairing potentially strengthening if a risk-off mood prevails.

Matthew Andrews

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