Pound South African Rand Exchange Rate Weekly Forecast: GBP/ZAR Strikes One-Month Low amid USD Weakness

The Pound South African Rand (GBP/ZAR) exchange rate fell to a one-month low last week. Broad based weakness in the US Dollar helping to bolster the emerging market Rand.

What’s Been Happening: Pound South African Rand Slips on Weak US Inflation Print

The Rand got off to a solid start last week. A prevailing risk-off mood helping to underpin the emerging market currency.

Accelerating the Rand’s ascent was a sharp pullback in the US Dollar in the wake of the latest US inflation release.

The slump in inflation prompted investors to scale back their Federal Reserve rate hike bets. Buoying the Rand on hopes it might relieve some of the pressure on South Africa’s economy.

However, some weaker-than-expected domestic data, coupled with waning risk appetite saw the Rand relinquish some of these gains at the end of the week.

Meanwhile, the Pound struggled through much of last week amid UK economic uncertainty, particularly amid concerns over an impending energy price crunch.

Some hawkish comments from a Bank of England (BoE) policymaker offered some respite for Sterling, before a contraction in UK GDP in the second quarter placed fresh pressure on the Pound at the end of the session.

Three Things to Watch Out for This Week

  1. UK Inflation

The primary focus for GBP investors this week is likely to be on the UK’s consumer price index. July’s are expected to report another acceleration in inflation. Will this bolster BoE rate hike expectations or exacerbate concerns over the cost of living crisis?

  1. UK Retail Sales

Also influencing GBP exchange rates this week will be the UK’s latest retail sales figures. Another contraction in sales growth is likely to weigh on Sterling sentiment.

  1. South African Retail Sales

The publication of South Africa’s own retail sales release could dent the Rand this week. Sales growth is forecast to have contracted again in June.

Pound South African Rand Forecast

In addition to a range of high-impact data releases, the Pound South African Rand exchange rate is also likely to remain highly sensitive to market risk appetite, with a souring mood likely to help the pairing bounce back from last week’s losses.

Matthew Andrews

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