The Pound South African Rand (GBP/ZAR) exchange rate climbed last week as Sterling was supported by some upwardly revised data.
What’s Been Happening: GBP/ZAR Rallies as UK PMIs Revised Higher
The Pound (GBP) maintained a positive trajectory against the South African Rand (ZAR) last week. The initial uptick in GBP/ZAR was linked to the UK’s latest manufacturing PMI as growth in the factory sector was revised slightly higher in September’s finalised figures.
At the same time, a surging US Dollar (USD) weighed on market risk appetite and limited demand for the Rand.
Midweek, the publication of the UK’s services PMI offered another boost to the Pound. While service sector growth declined in September, the final reading reported a far narrower contraction than previously feared.
Meanwhile, the Rand continued to face headwinds, despite a pullback in the US Dollar on Wednesday.
The Pound then received another leg up following comments from Bank of England (BoE) Deputy Governor Ben Broadbent. Who suggested that additional interest rate hikes remain ‘an open question’.
The Rand finally found a reprieve at the end of the week, as a pullback in the US Dollar coincided with an improved outlook for South Africa’s energy crisis.
Three Things to Watch Out for This Week
- Market Risk Sentiment
The escalating conflict between Hamas and Israel is likely to weaken market risk appetite this week, which could disproportionately impact the emerging market rand.
- UK GDP
The UK’s latest GDP figures are expected to show domestic growth rebounded in August. This could help to ease recession fears and bolster the Pound.
- US Data
Some high-impact US data releases could also influence GBP/ZAR this week. Could a slowing of US inflation weaken Federal Reserve rate hike bets and bolster the Rand?
GBP/ZAR Forecast
Risk appetite is likely to act as the main catalyst of movement in the GBP/ZAR exchange rate this week. Expect the Pound to come out on top if events in the Middle East continue to rattle investors.