GBP/ZAR Outlook: Slightly weaker, but likely to move sideways, as the rate is below its recent average and hovering near recent lows, lacking a clear driving force.
Key drivers:
- Rate gap: The Bank of England's cautious approach to rate cuts contrasts with the South African Reserve Bank's recent rate reduction, widening the monetary policy gap between the two currencies.
- Risk/commodities: The recent rise in oil prices may support the rand, as higher commodity prices can enhance the South African economy.
- One macro factor: The UK's looming tariff threats from the US are raising concerns about economic growth, further pressuring the pound.
Range: The GBP/ZAR is likely to drift within its recent range, reflecting the current uncertainties.
What could change it:
- Upside risk: A surprise improvement in UK economic data could bolster GBP demand.
- Downside risk: Further tariff announcements or negative UK economic forecasts may deepen pressure on the pound.