The Pound South African Rand (GBP/ZAR) climbed over the past week. Bank of England (BoE) rate hike bets and strong UK service sector performance strengthened the pairing.
What’s Been Happening: Pound Rebound as Services Output Hits 12-Month High
The Pound (GBP) and South African Rand (ZAR) both saw thin trading conditions initially amid a national holiday on Monday.
Evidence of cooling underlying inflation in the UK saw GBP/ZAR dip on Tuesday, as the final reading of April’s manufacturing PMI indicated easing price pressures. The PMI also confirmed a contraction in the sector.
However, the downturn in the Rand was limited by the latest manufacturing PMI. The survey printed a contraction of 49.8 in April.
On Thursday, the US Federal Reserve’s interest rate decision saw the Rand strengthen overnight. Signals of a rate hike pause from the Fed was seen as providing respite to South Africa’s struggling economy.
Additionally, hints from the South African Reserve Bank (SARB) of additional rate hikes pulled GBP/ZAR lower.
The Pound found fresh support on Thursday after an upward revision in the April’s services PMI. The final reading of the index struck a 12-month high.
Weekly highlights
- BoE Interest Rate Decision
The central bank is expected to raise rates by 25bps this week. Will signals of any further rate hikes bolster Sterling?
- UK GDP Data
Friday’s figures are forecast to show that the UK’s economy grew in the first quarter of 2023. Will signs of growth boost the Pound?
- SA Manufacturing Production
Manufacturing output is set to decline further in March. Could the impact of sustained power cuts keep pressure on ZAR?
GBP/ZAR Forecast
The South African Rand could edge lower over the course of this week if Eskom implements harsher load shedding measures.