Higher oil prices and a weaker rand will result in further petrol price hikes‚ which could see inflation breaching the 6% Reserve Bank inflation target‚ said Rand Merchant Bank analyst Mpho Tsebe. The Bank is likely to raise interest rates by 25 basis points before the end of 2018.
Local factors appear to be taking a back seat this week‚ with the major data release being US non-farm payrolls numbers on Friday. The data‚ especially on wage increases‚ will be closely watched as investors attempt to gauge the pace of monetary policy normalisation.
The pound was also under some strain on Tuesday‚ after a spike on Monday that followed news of UK Prime Minister Theresa May being willing to offer further concessions so as to broker a Brexit deal.
According to Oanda analyst Craig Erlam‚ the pound’s gains have unwound‚ with traders questioning whether these concessions will get support from British lawmakers‚ let alone the EU.