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Pound South African Rand Exchange Rate Outlook Could Shift if Inflation Reports Surprise Investors

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Pound South African Rand Exchange Rate Rebounds from Yearly Worst 

Despite a lack of particularly strong appeal for the Pound (GBP), investors bought the Pound South African Rand (GBP/ZAR) exchange rate back from its worst levels at the end of the week. Investors are hesitant to sell Sterling too much, as the outlook remains strong overall. 

After opening last week at the level of 20.01, GBP/ZAR briefly trended steadily before its downside movement gained momentum. 

Ultimately, GBP/ZAR plunged half a Rand and hit a low of 19.49. This was the worst GBP/ZAR level in over a year, since early-2020. 

At the time of writing on Friday afternoon though, GBP/ZAR is attempting to rebound. The pair currently trends in the region of 19.75. 

Pound (GBP) Exchange Rates Lack Drive as Brexit Fears Return 

After calming from a profit-taking selloff, investors had little reason to buy the Pound again. 

Instead, recent sessions have seen Sterling held under pressure by fresh uncertainties over how post-Brexit reality is harming UK trade and political stability. 

Not only is anxiety rising about Scottish independence sentiment ahead of Scotland elections next month, but UK exports to the EU have almost halved since Brexit at the beginning of the year. 

South African Rand (ZAR) Exchange Rates Pulls Back from Rally 

The South African Rand (ZAR) has seen broad strength over the past week. It has been capitalising on higher market sentiment after unsurprising US inflation data caused markets to give up on Federal Reserve tightening speculation. 

The Rand has also been appealing due to South Africa’s strong trade surplus, which has helped the Rand to perform strongly even among riskier currencies. 

According to Economists at ETM Analytics: 

‘While the ZAR’s strength of late has largely been founded on SA’s trade surplus, the high real yields the country offers have also come back into play amid improving global risk appetite and falling UST yields,’ 

Investors sold the Rand from its best levels on Friday, though it remains appealing overall. 

Pound South African Rand (GBP/ZAR) Exchange Rate Awaits Inflation Reports 

March inflation rate data for both the UK and South Africa will be published next Wednesday. As both economies continue to slowly recover from the coronavirus pandemic, inflation data could give investors a better idea of how price pressures are shifting. 

Stronger than expected price pressures could bolster central bank speculation. Strong UK inflation, for example, could boost speculation of a more hawkish Bank of England (BoE), which would be Pound positive. 

Other notable UK and South African data due next week includes UK job market and South African business indicator data on Tuesday. 

Towards the end of the week, UK retail sales and PMI projection data could also be highly influential. 

Of course, developments in domestic and global coronavirus situations, as well as shifts in market sentiment, could cause movement in the Pound South African Rand (GBP/ZAR) exchange rate as well.