Pound South African Rand Exchange Rate Weekly Forecast: GBP/ZAR Extends Losses on UK Recession Fears

The Pound South African Rand (GBP/ZAR) exchange rate remains on the back foot at the start of this week. Extending the losses seen last week amid UK recession concerns.

What’s Been Happening: Pound South African Rand Slumps on SARB Rate Hike Bets

The Rand trended broadly higher last week. Speculation regarding future rate hikes from the South African Reserve Bank (SARB) allowed the emerging market currency to shrug off the cautious mood which undermined many of its peers.

These SARB rate hike bets were fuelled by some positive data. Most notably South Africa’s latest consumer price index.

July’s CPI figures reported headline inflation jumped from 7.4% to 7.8%. Coupled with an unexpected drop in domestic unemployment in the second quarter, this bolstered expectations the SARB will continue to raise rates this year.

Meanwhile, the Pound struggled to attract support last week amid UK economic jitters. GBP investors grew increasingly unnerved by widespread industrial action.

Speculation the Bank of England (BoE) could more than double interest rates within a year lent some support to Sterling in the middle of the week.

However, GBP exchange rates then came under fresh pressure on Friday. Ofgem announced the UK’s energy price cap would almost double from October, stoking recession fears.

Three Things to Watch Out for This Week

  1. UK Politics

The final week of the Conservative leadership election could infuse additional volatility into the Pound. GBP investors are likely to be wary amid uncertainty over the economic policies of frontrunner Liz Truss.

  1. South African Trade Figures

The only data of note this week will be the publication of South Africa’s latest trade figures. Will a narrowing of South Africa’s trade surplus exert some pressure on the Rand this week?

  1. Market Risk Appetite

Market risk appetite is also likely to continue to influence the GBP/ZAR exchange rate this week, with a cautious mood potentially bolstering the pairing.

Pound South African Rand Forecast

Movement in the Pound South African Rand exchange rate may be choppy this week, with UK political uncertainty and recession fears likely to undermine Sterling sentiment, while a gloomy mood could drag on ZAR.

Matthew Andrews

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