The Pound South African Rand (GBP/ZAR) exchange rate tumbled last week, following the South African Reserve Bank’s (SARB) latest interest rate decision.
Last Week: Pound South African Rand Slump Following SARB’s Hawkish Surprise
The South African Rand (ZAR) initially retreated last week amid concerns over domestic economic growth, in the face of ongoing power cuts.
ZAR exchange rates began to recoup some of these losses in mid-week trade. The Rand being buoyed by a prevailing risk-on mood.
The Rand’s recovery then accelerated sharply in the wake of the SARB’s latest interest rate decision. The SARB shocked markets by announcing a 50bps hike, which sent GBP/ZAR tumbling to a four-week low.
Meanwhile, the Pound was initially buoyed last week on the back of a positive retail report.
However, Sterling struggled to consolidate these gains. A lull in UK economic data robbing the currency of its upward momentum through the middle of the week.
The Pound closed the week on a positive note following an upwardly revised GDP report. But this was not enough to offset the Rand’s strength and the GBP/ZAR exchange rate still closed the week lower.
Three Things to Watch out for This Week
- BoE Financial Policy Summary and Record
The Bank of England (BoE) will publish its Financial Policy Summary and Record this week. Will a broadly upbeat assessment of the UK’s financial resilience help to boost the Pound?
- UK Services PMI
The publication of the UK’s latest services PMI could also influence GBP exchange rates. If March’s finalised figures are revised down, similarly to the manufacturing PMI, Sterling could weaken.
- Risk Appetite
In the absence of any notable domestic data, movement in ZAR is likely to be tied to market risk dynamics. Will a prevailing risk on mood help the Rand to extend its gains?
Pound South African Rand Outlook
The Pound South Africa Rand exchange rate is off to a positive start so far this week amid rising Federal Reserve rate hike bets. Expectations that US interest rates will peak at a higher level than previously thought may act as headwind for the Rand in the coming days.