The Pound South African Rand (GBP/ZAR) exchange rate rose over the past week. GBP/ZAR was pushed higher by bets on further policy tightening from the Bank of England (BoE). The pairing also benefitted from rising oil prices, which dented enthusiasm for the South African Rand (ZAR).
What’s Been Happening: Pound’s Gains Capped by Cooling Business Inflation
The Pound (GBP) strengthened at the opening of last week after hawkish comments from BoE Chief Economist Huw Pill.
Markets continued to price in an additional 25bps worth of tightening from the central bank at their May meeting. The bets helped GBP/ZAR to firm.
A spike in crude oil prices also benefitted the pairing at the week’s opening. Reports of a production cut from the OPEC+ group sparked a jump in oil, which weighed on the emerging-market South African Rand (ZAR).
A downturn in South Africa’s private sector also weakened the Rand on Wednesday. March’s PMI indicated a return to contraction as continued power cuts harmed private sector performance.
However, the final reading of the UK’s services PMI dented Sterling amid evidence of easing inflation.
A souring market mood dented the risk-sensitive Rand at the end of the week, although thin trading conditions around the Pound due to the Easter weekend limited movement.
Weekly Highlights
- UK GDP
March’s data is expected to indicate a 0.1% expansion in the UK’s economy on Thursday. Will GBP rise off the back of the optimistic figures?
- BoE Bailey Speech
Investors will be looking to BoE Governor Andrew Bailey for any hints of further rate hikes. Will hawkish signals bolster Sterling?
- SA Manufacturing Data
February’s manufacturing output is set to tumble amid protracted power cuts. Will the downturn pull ZAR lower?
GBP/ZAR Forecast
The Pound could be dented by the prospect of further UK industrial action this week. The Rand could be affected by additional load shedding over the coming week. Power utility Eskom is expected to implement stage 5 measures.