Pound South African Rand Exchange Rate Weekly Forecast: GBP/ZAR Rallies in Cautious Trade

The Pound South African Rand (GBP/ZAR) exchange rate trended broadly higher last week. A bearish market mood sapping the appeal of the emerging market Rand.

What’s Been Happening: Pound South African Rand Buoyed as Fed Rate Hike Bets Sap Risk Appetite

The Rand faced notable selling pressure last week. The emerging market currency being undermined by a prevailing risk-off mood.

The softer risk appetite appeared to be driven in large part due to aggressive Federal Reserve interest rate hike bets.

Expectations for higher US interest rates both bolstered demand for the safe-haven US Dollar as well as raising concerns about the pressure this could place on South Africa’s debt laden economy.

The pound, meanwhile, found its gains against the Rand capped in the face of considerable uncertainty over the UK’s economic outlook.

GBP investors grew increasingly unnerved by the UK’s cost of living crisis as several reports forecast a UK recession is all but inevitable.

Three Things to Watch Out for This Week

  1. Liz Truss’ Energy Plan

The focus for GBP investors will be incoming Prime Minister Liz Truss’ plans to tackle the UK’s energy crisis. Sterling has seen some relief on reports suggesting Truss is planning to freeze energy prices. However questions remain over how long the freeze will remain in place and how it will be funded.

  1. South African GDP

The publication of South Africa’s latest GDP figures is likely to act as the primary catalyst of movement for the Rand. An expected contraction of growth in the second quarter likely dragging on ZAR exchange rates.

  1. South African Business Confidence

Also set to influence the Rand will be the latest domestic business confidence figures. Will a slump in morale in the third quarter also dent ZAR?

Pound South African Rand Forecast

In addition to the events list above, its likely the Pound South African Rand exchange rate will remain highly sensitive to market sentiment. The pairing likely to extend its gains if the mood remains broadly downbeat.

Matthew Andrews

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