Pound South African Rand (GBP/ZAR) Exchange Rate Weekly Forecast: Pound Tumbles after Disappointing GDP Data

The Pound South African Rand (GBP/ZAR) exchange rate edged lower over the past seven days. The UK’s poor outlook weighed on the currency pair amid evidence of a third quarter contraction. Fresh load shedding in South African underpinned GBP/ZAR, however.

What’s Been Happening: Sterling Slides as UK Outlook Darkens

The Pound (GBP) slipped over the course of last week as signs of a deep recession for the UK intensified.

Sterling initially edged higher amid some dip-buying. The currency was also strengthened by renewed confidence in UK Prime Minister Rishi Sunak.

Third quarter GDP data on Friday saw the short-term gains for the Pound undermined, however. The data indicated a 0.2% contraction in the UK’s economy, adding to speculation that the UK is set to a enter a deep recession.

The South African Rand (ZAR) weakened initially amid cautious market mood. Further load shedding by state power utility Eskom also weighed on ZAR.

However an above-forecast recovery in the SA manufacturing sector, in addition to sharp pullback in the US Dollar allowed the Rand to end the week on a positive note.

Weekly highlights

  1. UK Inflation Data

A forecast rise in inflation in October could have a mixed effect on Sterling. The data could push GBP higher amid increased BoE rate hike bets. Alternatively, could the impact of soaring prices on UK household spending pull the Pound lower?

  1. UK Autumn Statement

The UK government’s long-awaited Autumn Statement is reported to contain drastic spending cuts and tax rises. If Chancellor Jeremy Hunt’s measures are seen as harming UK growth, the Pound could slide.

  1. South African Retail Sales

Wednesday’s data for the retail sector is forecast to show a fifth consecutive month of slowdown. As the country faces continued power cuts and high inflation, could the data prompt the Rand to tumble?

GBP/ZAR Forecast

The Pound could find support on Friday from a forecast uptick in October’s retail sales. The rise would come after two months of losses for the sector.

The Rand could be pushed lower if Eskom implements further load shedding in the coming week.

Gareth Monk

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