The Pound South African Rand (GBP/ZAR) exchange rate struck a one-month high last week. As underwhelming domestic data weighed heavily on the Rand.
What’s Been Happening: Pound South African Rand Jumps on SA Current Account Shock
The Rand initially firmed last week. A pullback in the US Dollar helping to bolster demand for the emerging market currency.
However ZAR exchange rates quickly came under pressure as South Africa’s latest GDP figures confirmed SA’s economy contracted in Q2.
After stabilising in mid-week trade, the ZAR selloff resumed on Thursday after South Africa reported a shock deficit in its current account.
Meanwhile, the Pound was buoyed through the first half of last week amid reports Liz Truss’s new government was planning to freeze energy prices.
Sterling then rand into headwinds on Wednesday amid some dovish comments from Bank of England (BoE) policymakers. Speaking before Parliament’s Treasury select committee, BoE governor Andrew Bailey played down suggestions the BoE could act more ‘forcefully’ when raising interest rates.
GBP exchange rates firmed again on Thursday as Truss unveiled her ‘energy price guarantee’.
But the Pound then stumbled again at the end of the week. GBP exchange rates were subdued following after the BoE postponed its next interest rate decision, following the death of the Queen.
Three Things to Watch Out for This Week
- UK Inflation
The release of the UK’s consumer price index could act as a drag on the Pound this week. As another acceleration of inflation may stoke concerns over the cost of living crisis.
- UK Retail Sales
Also set to influence Sterling this week will be the UK’s latest retail sales figures. Will a slump in sales growth last month revive concerns over the UK’s economic outlook?
- South African Retail Sales
The only ZAR data release of note this week will be South Africa’s own retail sales release. Another contraction in sales growth may weigh on the Rand.
Pound South African Rand Forecast
The Pound South African Rand exchange rate is also likely to remain sensitive to market sentiment this week. Will an improving risk appetite help to revive the Rand’s fortunes?