GBP/ZAR Outlook:
Bearish, trading below its recent average and near recent lows, influenced by ongoing political uncertainty in the UK.
Key drivers:
• Rate gap: The Bank of England has adopted a dovish approach, maintaining steady interest rates, unlike the South African Reserve Bank, which has kept rates high to combat inflation.
• Risk/commodities: The South African rand has gained support from strong global demand for commodities like gold and platinum, enhancing its position against the pound.
• One macro factor: UK political jitters surrounding Keir Starmer's leadership have raised concerns, impacting the pound's stability.
Range:
Expect GBP/ZAR to remain near recent lows, with limited movement within its current range.
What could change it:
• Upside risk: A sudden improvement in UK economic data or political stability could support GBP strength.
• Downside risk: Continued political uncertainty or a significant downturn in commodity prices could weaken the rand further against the pound.