The Pound South African Rand (GBP/ZAR) exchange rate climbed over the past seven days. Political turmoil in South Africa propelled the pairing sharply higher.
What’s Been Happening: South African Rand Slips as President Ramaphosa Faces Impeachment
The South Africa Rand (ZAR) nosedived last week. Political turmoil weighed on the Rand as impeachment proceedings against President Cyril Ramaphosa escalated.
Worsening load shedding also kept ZAR suppressed over the past seven days. Power utility Eskom announced that they would be moving to stage 6 load shedding on Thursday.
The Pound initially struggled for direction last week amid a lack of significant data. An upbeat market mood and Bank of England (BoE) rate hike bets saw Sterling firm, however.
On the other hand, gains for GBP were limited throughout the past week by a poor outlook for the UK economy as well as widespread industrial action.
Positive GDP data on Monday helped boost the Pound, however. October’s figures printed a 0.4% expansion in the UK’s economy after September’s bank holiday slump.
The data did little to improve the UK’s long-term outlook however, with experts still forecasting a sharp recession.
Weekly highlights
- BoE Interest Rate Decision
With a 50bps rate hike largely priced in, markets will be looking to the Bank of England’s (BoE) forward guidance. Will the central bank signal a hawkish pivot and push GBP higher?
- UK Inflation Data
Prior to the BoE’s interest rate decision, the latest UK inflation figures are forecast to indicate cooling inflationary pressures. Will the data see Sterling slip?
- SA Inflation Figures
Whilst November’s data is set to tick lower, the figures will still represent the South African Reserve Bank’s (SARB) upper inflation range. Will rate hike bets push ZAR higher?
GBP/ZAR Forecast
A forecast slowdown in November’s retail sales could weigh on the Pound amid signs of a further slowdown in the sector. The vote concerning President Ramaphosa’s impeachment could also prompt dramatic movement in the Rand.