Pound South African Rand Exchange Rate Weekly Forecast: GBP/ZAR Volatile amid Mixed Data

The Pound South African Rand (GBP/ZAR) exchange rate traded in a wide range last week as a result of mixed UK data and a fluctuating market mood.

What’s Been Happening: GBP/ZAR Fluctuates in Response to High Impact Data

The Pound (GBP) was initially flat against the South African Rand (ZAR) last week as both currencies struggled to find direction amid a lull in data.

The Rand then roared higher on Tuesday after a sharp plunge in the US Dollar (USD), following the latest US inflation figures. This was more than enough to offset the modest gains for the Pound, which followed the UK’s upbeat jobs report.

GBP/ZAR extended these losses midweek after the UK’s own inflation figures missed expectations and dampened Bank of England (BoE) interest rate expectations.

The pairing then mounted a convincing recovery in the second half of the week. This was primarily driven by a pullback in the Rand. Which came ahead of a review of South Africa’s sovereign credit ratings by S&P Global on Friday.

However, this recovery was stymied at the end of the week after the Pound was undermined by a shock contraction in UK retail sales last month.

Three Things to Watch Out for This Week

  1. UK Autumn Statement 

UK Chancellor Jeremy Hunt is set to outline his latest tax and spending plans when he delivers his Autumn Statement on Wednesday. If the measures are seen as boosting growth this could strengthen the Pound.

  1. UK PMIs

Also influencing Sterling sentiment this week will be the UK’s latest PMIs. If November’s preliminary figures report the UK private sector continues to contract, Sterling could falter.

  1. SARB Interest Rate Decision

The South African Reserve Bank (SARB) will deliver its latest interest rate decision on Thursday. No policy changes are expected from the SARB this month, but could a dovish outlook from the bank weigh on ZAR?

GBP/ZAR Forecast

In addition to the aforementioned data events, the GBP/ZAR exchange rate is likely to remain highly sensitive to market sentiment this week. Will a sustained improvement in risk appetite help to bolster the Rand?

Matthew Andrews

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