The Pound South African Rand (GBP/ZAR) wavered over the past week. The pairing ultimately ending slightly higher than its starting position. The South African Reserve Bank’s (SARB) interest rate decision contributed to the pair’s volatility. Above-forecast UK inflation data also prompted shifts in the pair.
What’s Been Happening: South African Rand Plunges to Record-Lows after SARB Hike
The GBP/ZAR exchange rate slipped at the start of last week as bets on a 50bps hike from the SARB intensified. The South African Rand (ZAR) strengthened in response.
On Tuesday, mixed UK PMI figures dented confidence in the Pound (GBP). The evidence of a private sector slowdown deepened losses for GBP/ZAR.
Hotter-than-expected UK inflation figures lent some support to Sterling on Wednesday. Core inflation rose to a 31-year high of 6.8%. This increased pressure on the Bank of England (BoE) to continue with further policy tightening.
Thursday brought the SARB’s interest rate decision. The central bank opted for a 50bps hike. However, its downbeat forecasts for the South African economy sent the Rand plummeting and prompted a rally in the pair.
Upbeat UK retail sales data on Friday bolstered the Pound. April’s sales volumes beat forecasts to increase by 0.5%. Some repricing of ZAR limited the positive impact of the data, however. This pulled the pairing lower.
Weekly highlights
- UK Manufacturing PMI Final Reading
The final reading of May’s PMI is expected to confirm a third consecutive downturn. Will the slowdown pull GBP lower?
- South African Manufacturing PMI
May’s PMI is forecast to report a return to growth for the factory sector for the first time since January. Could signs of recovery boost the Rand?
- South Africa Trade Data
April’s trade surplus is set to narrow to ZAR4.85bn in April. Will the sluggish figures pull ZAR lower?
GBP/ZAR Forecast
The Pound could be underpinned by any bets on additional rate hikes from the BoE. The South African Rand, meanwhile, could come under pressure from more load shedding.