GBP/ZAR Outlook: The outlook is slightly weaker, but likely to move sideways as the rate is below its recent average and near recent lows.
Key drivers:
• Rate gap: The Bank of England's cautious approach to rate cuts contrasts with the South African Reserve Bank's recent interest rate reduction, supporting the rand.
• Risk/commodities: The recent rise in oil prices may impact the rand due to South Africa's exposure to commodity trends, as higher oil prices can weigh on the economy.
• One macro factor: The UK's projected GDP growth slowdown is adding pressure to the pound, limiting its upside potential.
Range: Given recent price stability, GBP/ZAR is likely to drift within its established range without testing extremes.
What could change it:
• Upside risk: Strong UK economic data could improve GBP's performance against the rand.
• Downside risk: Continued positive sentiment towards ZAR from global investors may further weaken the GBP against it.