GBP/ZAR Exchange Rate Weekly Forecast: UK Government Scraps Tax Cut Plans

The Pound South African Rand (GBP/ZAR) exchange rate made gains over the past week. The Bank of England’s (BoE) intervention in the bond market and UK government U-turn helped to bolster confidence in the currency pair. Continued load shedding in South Africa also helped bolster GBP/ZAR.

What’s Been Happening: Pound Rallies Following Government U-Turn

Drastic changes in the UK government’s financial policy boosted the Pound (GBP) last week. Signs of a U-turn from UK Prime Minister Liz Truss after her contentious mini budget helped to restore confidence in Sterling.

Signs that the BoE would continue its bond buying also supported GBP’s gains. The central bank signalled that it would continue to intervene to stabilise the UK bond market.

The sacking of UK Chancellor Kwasi Kwarteng stoked volatility in Sterling at the end of the week before Jeremy Hunt was appointed as his successor.

The South African Rand (ZAR) suffered over the past seven days amid sustained load shedding. Power utility Eskom’s Chief Operating Officer Jan Oberholzer warned that the country could see persistent power cuts for the next 18 months.

Weekly highlights

  1. UK Inflation Data

Inflation in September is forecast to tick higher on Wednesday after having unexpectedly fallen in August. Could fears over increased inflationary pressures dent confidence in the UK economy?

  1. ZA Inflation Data

September’s inflation is forecast to have eased slightly in September. Could the Rand see losses amid reduced bets on further interest rate hikes from the South African Reserve Bank (SARB)?

  1. UK Political Instability

With confidence in PM Liz Truss waning, markets are concerned that the UK could see a further period of political uncertainty. Will the government’s new direction help calm markets?

GBP/ZAR Forecast

The Pound could see its gains reversed on Friday if retail sales figures fall as predicted. For the South African Rand, the announcement of any further load shedding could weigh on the currency.

Gareth Monk

Contact Gareth Monk


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