The Pound South African Rand (GBP/ZAR) exchange rate raced higher last week as GBP investors welcomed Rishi Sunak’s appointment as the UK’s new Prime Minister.
What’s Been Happening: Pound South African Rand Rallies on Sunak Optimism
The Pound raced higher against the majority of its peers last week. Sterling sentiment being bolstered by optimism over Sunak’s premiership.
Sunak’s perceived status as a ‘safe pair of hands’ turbocharged the GBP/ZAR exchange rate. Markets hope he will help to restore UK fiscal and political credibility.
Sterling’s ascent hit some turbulence in mid-week trade as the UK government announced it would be delaying its fiscal statement. GBP investors fear how this could impact the Bank of England’s (BoE) November interest rate decision.
However the Pound quickly found its stride again to end the week on a positive note.
Meanwhile, the Rand initially got off to a slow start as state utility Eskom warned scheduled power cuts will likely need to remain in place throughout the winter.
However ZAR exchange rates firmed later in the week. Underpinned by risk-on flows and a positive response to South Africa’s medium-term budget.
Three Things to Watch Out for This Week
- BoE Interest Rate Decision
The primary focus this week is likely to be on the BoE’s latest interest rate decision. Markets are expecting a 75bps rate hike this month. But will the bank err on the side of caution amid UK fiscal uncertainty?
- UK Services PMI
The UK’s finalised services PMI for October could drag on Sterling later in the week as it is expected to confirm a contraction in the vital services sector. However could an upside surprise bolster GBP exchange rates?
- Market Risk Appetite
In the absence of any high impact ZAR data, its likely the main catalyst of movement for the Rand will be market risk appetite. Will a broadly downbeat mood leave the Rand on the back foot through much of this week?
Pound South African Rand Forecast
Movement in the Pound South African Rand exchange rate is likely to be tied to the BoE’s latest interest rate decision this week. Will a cautious decision reflect poorly on GBP/ZAR?