The rate of exchange of the GBP to ZAR has skyrocketed after a ratings downgrade by Moody’s stripped South Africa of its investment-grade credit rating on Monday. The credit rating downgrade by Moody’s rocked the South African, causing significant weakening against the currency majors. The GBP to ZAR rate is currently at 22.24801 or 1.22% higher. The GBP to ZAR rate had gone as high as 22.51109 on the day but has since retreated.
Moody’s premised its downgrade on the continued slump in fiscal strength. The South African economy is back into recession as the coronavirus outbreak has exacerbated the already weakened economic fundamentals.
The downgrade has forced the South African Rand to endure yet another hit to its value, which has allowed currency pairs such as the GBPZAR to surge nearly 10.7% in March 2020.
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Technical Outlook for GBPZAR
The GBPZAR is challenging the resistance level formed by the previous lows of at 21.58047. There must be a decisive 3% upside penetration close above this level for the breakout to be confirmed on the weekly chart. This breakout could potentially send the GBPZAR towards the 22.56688 resistance (previous low of 23 Nay 2016). The 16 May 2016 highs at 23.36836 beckons readily if the 22.56688 resistance gives way in the future.
On the flip side, profit-taking could allow a brief pullback of the GBPZAR towards the next support level at the 20.35410 formed by the 18 April and 20 June 2016 lows. 19.68257 could become relevant if the extent of the pullback is such that the 20.35410 support is unable to hold back the downside move.
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