The Pound South African Rand (GBP/ZAR) exchange rate fell over the past seven days. Downbeat data for the UK weighed on the currency pair. Later in the week, the Bank of England’s (BoE) interest rate hike prompted further losses for GBP/ZAR amid confirmation of a recession for the UK.
What’s Been Happening: Pound Plummets as BoE Hikes Rates and Confirms Recession for UK
The Pound (GBP) tumbled over the course of the past week. Sterling initially saw losses after poor data for the UK’s manufacturing sector.
A fresh rise in food inflation figures also dented confidence in the currency amid concerns the data could worsen the UK’s cost-of-living crisis.
The Bank of England’s (BoE) interest rate decision was the main driver of Sterling’s movement last week, however. The BoE hiked rates by 0.75% whilst also warning that the UK had already entered a recession.
Sterling enjoyed an uptick at week’s end however amid some dip-buying and a more upbeat market mood.
The South African Rand (ZAR) benefitted from a risk-on mood earlier in the week, as well as a stronger US Dollar (USD).
Gains for the Rand were continually limited by renewed load shedding, however. Power utility Eskom announced that stage 2 power cuts would be implemented indefinitely.
- UK GDP Data
After the BoE’s recession forecasts, the latest GDP data on Friday is set to indicate a further contraction in the UK’s economy. Will the figures add to the UK’s poor outlook and weigh on Sterling?
- SA Load Shedding
Stage 2 load shedding is set to continue indefinitely amid a breakdown in key generating units. Will the power cuts dent confidence in the country’s economic outlook?
- UK Political Turmoil
UK Prime Minister is facing pressure over his appointment of both Suella Braverman and Gavin Williamson as ministers. Will the potential for further uncertainty push GBP lower?
The fallout from last week’s BoE interest rate decision may prompt further movement in the Pound. On the other hand, a narrowing of the UK’s trade deficit could lend support to GBP.