The Pound South African Rand (GBP/ZAR) exchange rate strengthened over the past seven days. A recovery in risk appetite helped to bolster the pairing. The GBP/ZAR exchange rate was also boosted by further load shedding measures in South Africa.
What’s Been Happening: Pound’s Gains Limited by Private Sector Downturn
The Pound initially weakened against the Rand last week, despite a stronger-than-expected UK manufacturing PMI. ZAR exchange rates were buoyed by the reopening of China’s economy.
The Rand then began to relinquish these gains after the release of the latest meeting minutes from the US Federal Reserve. Signals of further interest rate hikes from the Fed pushed ZAR lower.
The resulting uptick in the GBP/ZAR exchange rate on Thursday was then tempered by a downward revision in the final reading of the UK’s latest service sector PMI.
A recovery in global risk appetite helped the Pound to rebound on Friday, however. GBP also found support from news that UK ministers would be reopening pay talks with NHS and rail unions.
At the same time, the Rand saw sharp losses against its peers over the past week. The implementation of stage 4 load shedding in South Africa dented confidence in ZAR.
Weekly highlights
- UK GDP Data
Friday’s GDP figures are forecast to indicate a contraction in the UK’s economy in November. If the data adds to predictions of a sharp recession for the UK, could the Pound slip?
- UK Industrial Production
Also on Friday, the latest data from the UK’s manufacturing sector is expected to slump after surprise growth in October. Will the sector’s slowdown weigh on Sterling?
- SA Load Shedding
Power utility Eskom is expected to continue stage 3 load shedding throughout the week. Will the rolling power cuts harm enthusiasm for the emerging market currency?
GBP/ZAR Forecast
The Pound may see further pressure from potential further strikes by key services. Markets will be watching ongoing talks between union heads and government ministers for any meaningful progress.
The South African Rand could be affected by any shifts in the US Dollar, as well as fluctuations in commodity prices.