The Pound South African Rand (GBP/ZAR) exchange rate shot higher last week. A gloomy market mood underpinning the pairing as skittish investors shunned the Rand.
What’s Been Happening: Pound South African Rand Soars in Gloomy Trade
The Rand got off to a poor start last week. Signs China’s economic recovery may be fizzling out initially undermining the emerging market currency.
Strong demand for the US Dollar throughout the week also softened risk appetite. While hawkish Federal Reserve rate hike bets dented ZAR sentiment.
South Africa’s latest retail sales print placed additional pressure on the Rand. June’s figures reported sales growth contracted 2.5% year-on-year.
Meanwhile, the Pound was able to capitalise on the Rand’s weakness, thanks to some upbeat UK data releases.
Stronger-than-expected wage, inflation and retail sales helped to bolster bets for another 50bps rate hike from the Bank of England (BoE) next month.
Sterling’s gains were tempered in the second half of the week, however. Concerns over widespread industrial action, political uncertainty and the cost-of-living crisis weighed on GBP sentiment.
Three Things to Watch Out for This Week
- UK PMIs
The release of the UK’s latest PMI figures could provide some support to the Pound this week. August’s preliminary figures reported robust growth in the vital services sector.
- South African Unemployment
South Africa’s latest jobs report may dent the Rand as it is expected to report unemployment ticked up again in the second quarter.
- South African Inflation
Also influencing the Rand will be South Africa’s consumer price index. Will another uptick in inflation boost the Rand as it places more pressure on the South African Reserve Bank (SARB) to hike rates?
Pound South African Rand Forecast
In addition to this week’s data, movement in the Pound South African Rand exchange rate is likely to remain linked to market risk sentiment. If a gloomy mood continues to prevail the pairing may continue to climb.