The Pound South African Rand (GBP/ZAR) exchange rate strengthened last week as a bearish market mood weighed on ZAR.
What’s Been Happening: Pound South African Rand Strengthens amid Downbeat Mood
The South African Rand (ZAR) stumbled last week as the emerging market currency ran afoul of a souring market mood.
This risk-negative sentiment was linked to fears over global growth. Disappointment over China’s modest stimulus announcement and expectations for higher interest rates both weighed on ZAR.
One bright spot for the Rand was the publication of South Africa’s consumer price index. A drop in inflation was seen as relieving some pressure on the country’s struggling economy.
Meanwhile trade in the Pound (GBP) was mixed last week as the Bank of England (BoE) delivered its latest interest rate decision.
After initially firming on the back of BoE rate hike bets, Sterling suffered a major setback following the publication of the UK’s own CPI figures. Stubbornly high inflation led to warnings the BoE may hike the UK into recession to bring prices back under control.
While the GBP/ZAR exchange rate strengthened through the latter half of the week, elsewhere the Pound remained subdued after these growth fears were exacerbated as the BoE delivered a surprise 50bps rate hike.
Three Things to Watch Out for This Week
- BoE Bailey Speech
BoE Governor Andrew Bailey is set to speak on a panel at the European Central Bank’s (ECB) Sintra Forum. GBP investors will be looking to Bailey to shed more light on the BoE’s outlook for monetary policy.
- UK GDP
The UK’s finalised GDP release for the first quarter is expected to confirm a modest 0.1%. But could a revision to growth inject some volatility into the Pound?
- Risk Sentiment
Market sentiment appears to be improving as we move away from the turmoil in Russia over the weekend. If this persists the Rand may recoup some of last week’s losses.
Pound South African Rand Forecast
While data is thin on the ground this week, external events such as the ECB Forum could still lead to some notable swings in the Pound South African Rand exchange rate.