The Pound South African Rand (GBP/ZAR) exchange rate climbed over the past week. The currency pair found support from a softer interest rate stance from the US Federal Reserve. Poor UK data kept gains for the exchange rate capped, however.
What’s Been Happening: Pound Soars amid Signs of Fed Rate Hike Slowdown
The Pound (GBP) stumbled initially last week as downbeat retail sales figures on Monday added to Sterling’s woes.
The UK’s worsening cost-of-living crisis damped enthusiasm for Sterling. Food inflation hit a record high on Wednesday. A drop in business confidence also weighed on GBP.
Signs on Thursday that the Fed would be slowing its pace of policy tightening saw the Pound soar, however. Fresh optimism over the UK-EU NI Protocol negotiations also bolstered GBP.
The South African Rand (ZAR) stumbled over the past week amid further load shedding measures from power utility Eskom.
A drop in third-quarter unemployment on Tuesday also pulled the Rand lower. The data added to indications of a cooling labour market.
The beginning of impeachment proceedings against SA President Cyril Ramaphosa sent ZAR lower at week’s end. Ramaphosa faces allegations of corruption amid a cover-up of a theft at his farm.
Three Things to Watch Out for This Week
- President Ramaphosa Impeachment Proceedings
Ramaphosa is expected to reject the findings of the investigation into any potential corruption. This could extend the length of the motions against him. Could the political instability keep pressure on ZAR?
- UK Domestic Headlines
Amid a lack of UK economic data this week, domestic news could drive GBP. Will concerns about the UK’s bleak economic outlook and social discontent hurt Sterling?
- SA Manufacturing Data
Performance in South Africa’s manufacturing sector is forecast to drop in October. Will the figures dent confidence in the country’s long-term recovery?
GBP/ZAR Forecast
The latest UK house price data on Wednesday could weigh on Sterling. The figures are forecast to slide.
Further load shedding in the coming week may push ZAR lower. Public sector industrial action could also dent confidence in the currency.