GBP/ZAR Outlook:
The GBP/ZAR exchange rate is currently below its 90-day average and near recent lows, leading to a likely decrease. The outlook is influenced by recent UK economic data that suggests pressure on the pound.
Key drivers:
• Rate gap: The Bank of England's cautious stance on interest rates contrasts with the South African Reserve Bank's recent rate cut, weakening the GBP against the ZAR.
• Risk/commodities: The rise in oil prices may support the rand, as higher commodity prices often strengthen South Africa’s currency due to its reliance on exports.
• One macro factor: The latest UK employment data showed rising unemployment, which could heighten expectations for additional rate cuts from the Bank of England.
Range:
Expect the GBP/ZAR to test its recent lows, as it may continue to drift within its stable range.
What could change it:
• Upside risk: A surprise increase in UK inflation could lead to a stronger GBP if it delays BoE rate cuts.
• Downside risk: Further disappointing employment figures or a softer consumer price index could pressure the pound even more.