The Pound South African Rand (GBP/ZAR) exchange rate fell over the past seven days. A pullback in Bank of England (BoE) rate hike bets pulled the pairing lower. Positive PMIs for South Africa’s private sectors also weighed on GBP/ZAR.
What’s Been Happening: Pound Tumbles after Dovish BoE Bailey Speech
The Pound (GBP) initially strengthened last week. The recent announcement of a new UK-EU Northern Ireland deal inspire confidence in Sterling.
GBP then slumped on Wednesday following a dovish speech from BoE Governor Andrew Bailey. Bailey signalled UK interest rates may have peaked, and that further policy tightening decisions would be ‘data driven’.
An upbeat speech from BoE chief economist Huw Pill helped to stem Sterling’s losses on Thursday. An upward revision to February’s encouraging services sector PMI also lent support to GBP.
The South African Rand (ZAR) found support from a drop in unemployment on Tuesday. The Rand’s gains were capped by a drastic widening in the country’s trade deficit, however.
The Rand found strength from positive PMI figures on Friday as the country’s private sectors returned to growth in February.
Weekly Highlights
- UK GDP
January’s GDP figures are set to report a 0.1% expansion of the UK’s economy. Could the data help to stem recession fears and bolster the Pound?
- SA Power Crisis
South Africa’s power crisis may continue to influence the Rand this week. The announcement of any further load shedding measures by power utility Eskom may drag on ZAR.
- SA Business Confidence
SA business confidence is set to fall for the fourth consecutive quarter on Friday. Could the continued impact of load shedding on businesses pull the Rand lower?
GBP/ZAR Forecast
The Pound may also come under pressure from any developments surrounding the ‘Windsor Framework’ in the coming week. Additionally, any shifts in bets on further BoE action could also drive movement in GBP.