The Pound (GBP) struggled at the beginning of this week, except when it came up against a weak Rand.
The International Monetary Fund (IMFprediction )’s that the UK will probably be the only major economy to contract in 2023 seemed to be the driving force behind this.
A nationwide strike increased the pressure on the pound during midweek trading as investors in GBP were concerned that extensive industrial action may further impair the UK economy.
However, after the Bank of England (BoE) finished its first policy meeting of 2023, the majority of the Pound’s losses were concentrated in the second part of the week.
While the bank’s future guidance was weakened, Bailey said that UK inflation had likely peaked.
Concerns over Eskom hurt the South African Rand (ZAR)
Earlier this week, new worries over South Africa’s prolonged power crisis caused the South African Rand (ZAR) to first falter.
The planned power outages continue to be a problem for the Rand, raising fears that South Africa is losing billions in production.
After the Federal Reserve’s policy meeting in February, the Rand then recovered in the session’s second half.
Investors continued to believe the US central bank is reaching the conclusion of its rate-hiking cycle and that it may lower interest rates by the end of 2023 in the wake of a 25 bps rate rise and a perceived dovish lean from the Fed.
Forecast for the GBP/ZAR exchange rate: Positive GDP Print to Support Sterling?
Looking ahead to this coming week, the release of the most recent UK GDP numbers is anticipated to be the primary driver of change in the Pound to South African Rand exchange rate.
For GBP investors, the first publication of the fourth quarter GDP numbers will be crucial since it will reveal if the UK entered a recession at the end of 2022.
According to recent data, the UK avoided signing a contract in the most recent quarter, which would probably strengthen the pound.
GBP exchange rates, however, might plummet if we have another downturn that sends the UK into a recession.
The Rand may also follow the market’s risk appetite this week in the lack of any noteworthy ZAR data releases, which might cause the emerging market currency to depreciate if a risk-off atmosphere prevails.