The Pound South African Rand (GBP/ZAR) exchange rate tumbled over the past week. The Bank of England’s (BoE) dovish interest rate decision weighed heavily on the currency pair. A return to political stability in South Africa also pulled the pair lower.
What’s Been Happening: Pound Slides as BoE Policymakers Split over Rate Hike
The Pound (GBP) slumped over the past week. Sterling strengthened initially after better-than-expected GDP data on Monday. Expectations of a recession limited GBP’s gains, however.
Tuesday’s jobs data had a mixed effect on the Pound. Unemployment ticked higher which kept pressure on GBP amid signs of a cooling labour market. On the other hand, wage growth continued to climb. The figures bolstered market bets on a 50bps interest rate hike from the BoE.
The Pound slumped following the BoE’s interest rate decision on Thursday as two policymakers voted to leave rates unchanged, suggesting the bank’s hiking cycle may be near its end.
The South African Rand (ZAR) strengthened over the past week. President Cyril Ramaphosa survived his impeachment vote on Tuesday which boosted the Rand.
ZAR saw some of its gains limited by continued turbulence at power utility Eskom, however. As well as stage 6 load shedding, Eskom CEO Andre De Ruyter resigned.
Weekly highlights
- UK GDP
The final reading of third-quarter GDP figures on Friday is expected to confirm a contraction in the UK’s economy. Will the data add to recession forecasts and weigh on GBP?
- UK Retail Data
Thursday’s latest distributive trades figures are expected to fall further. Could the data add to the UK retail sector’s poor outlook and pull Sterling lower?
- South Africa Political Developments
President Ramaphosa’s cabinet reshuffle is expected to take place this week following the impeachment proceedings. Could signs of further political stability boost the Rand?
GBP/ZAR Forecast
In addition, the Pound could continue to face pressure from widespread industrial action across the UK. For the Rand, the introduction of further load shedding could weigh on the currency in the coming week.