The Pound South African Rand (GBP/ZAR) exchange rate weakened last week, amid dour UK private sector data.
What’s Been Happening: Pound Dented by Dismal October PMIs
The Pound (GBP) began last week’s session slowly, as a light data calendar kept GBP exchange rates trapped in narrow boundaries.
October’s flash PMIs brought Sterling to its knees on Tuesday, as they printed below forecasts. The UK’s private sector saw further contractions across the board, prompting renewed recession fears amongst investors.
Sterling’s weakness was furthered by downbeat retail sales data from the Confederation of British Industry (CBI) on Thursday.
Friday saw GBP exchange rates trade without a clear direction, with a lack of impactful data keeping the Pound muted.
Meanwhile, the South African Rand (ZAR) traded in line with market risk appetite for most of the week. As fighting between Israel and Hamas continued to intensify at the beginning of the week, the acutely risk-sensitive Rand fell.
However, a hotter-than-expected producer price index brought strength to ZAR on Thursday. In September, PPI increased to 1.5%, above forecasts of a 1.1% increase. This boosted the Rand by sparking renewed South African Reserve Bank (SARB) tightening bets.
On Friday, as the market mood improved, the Rand gathered pace against its peers, ending the week on strong footing.
Three Things to Watch Out for This Week
- BoE Interest Rate Decision
On Thursday, the Bank of England (BoE) is set to announce its latest interest rate decision. If the BoE keeps rates unchanged, Sterling could slump.
- Risk Appetite
The market mood could continue to influence ZAR this week. Could a dovish Federal Reserve decision cheer markets and dent the Rand?
- UK Services PMI
The finalised print of the UK’s October service sector index is due on Friday. If this confirms a further downturn in activity, GBP may weaken.
Pound South African Rand Forecast
The GBP/ZAR exchange rate could endure changeable trade this week, following the publication of the latest South African PMIs. On Friday, the SA global PMI is forecast to show a return to expansion in the South African private sector, which could strengthen the Rand.