The Pound South African Rand (GBP/ZAR) exchange rate traded within a narrow range over the past week. Political turmoil in the UK kept gains for the pair capped. On the other hand, continued load shedding in South Africa tempered ZAR demand.
What’s Been Happening: Pound Tumbles as Truss Resigns, Regains Ground as Sunak Appointed PM
The Pound (GBP) got off to a strong start last week as it was buoyed by the scrapping of the UK’s contentious mini budget.
Questions over the future of Liz Truss’s premiership, coupled with a hotter-than-expected UK inflation print then acted as a headwind for Sterling in mid-week trade.
Truss’s resignation on Thursday helped GBP to reverse some of these losses, although these gains were short-lived. The prospect of another leadership contest and abysmal UK retail sales figures weighing on the Pound at the end of the week.
The appointment of Rishi Sunak as PM on Monday helped to stabilise the currency, however.
Continued load-shedding in South Africa weighed on the South African Rand (ZAR) last week. State power utility Eskom announced that the power cuts would likely continue into the following week amid further generator failures.
- UK Political Developments
Despite the appointment of Sunak as PM, there are concerns as to the stability within the Conservative party. Will Sunak be able to unite the party?
- South African Medium-Term Budget
Enoch Godongwana’s medium-term budget policy statement will be a key focus for ZAR investors this week. South Africa’s finance minister is expected to outline plans to help support growth, while also helping to relieve some of Eskom’s debt burden.
- UK Distributive Trades Figures
The retail sector’s performance is expected to slump even further on Wednesday, adding to the sector’s already poor outlook. Will the data push the Pound lower?
Speeches from Bank of England (BoE) officials this week could also prompt movement in GBP if they give any hints to how aggressively the bank will raise interest rates next week. Meanwhile, further load shedding over the coming week could keep pressure on the Rand.