The GBP/ZAR price is trading at an important resistance level as the South African rand retreat continues. The pound-to-rand exchange rate is at 20.26, which is a few points above last month’s low of 19. Similarly, the USD/ZAR and the EUR/ZAR pairs have recently been in an upward trend.
The GBP/ZAR pair has been rising as investors have moved from emerging market currencies to those of developed countries. That happened as inflation in most countries made EM debt substantially expensive to repay in the coming years.
The pair also rose after the strong UK GDP numbers pointed to more tightening by the Bank of England. The numbers revealed that the country’s economy expanded in May. In addition, other data like construction, manufacturing, and industrial production were also better than what analysts were expecting.
The GBP to ZAR rose after Andrew Bailey, the head of the Bank of England (BOE) warned that it will get more hawkish in the coming months. This was interpreted to mean that the bank will hike rates by as much as 0.75% in the coming meeting. Data published last week showed that UK inflation rose to 9.1% in June.
GBP/ZAR forecast
The daily chart shows that the GBPZAR price is trading at an important level. It is trading at 20.27, which is a crucial level since it was the highest point in April of this year. It is also along the 50% Fibonacci Retracement level. In addition, the pair has moved above the 25-day and 50-day moving averages. It has also formed a bullish engulfing pattern, which is usually a bullish view.
Therefore, there is a likelihood that the GBP to ZAR price will continue rising as bulls target the 61.8% retracement point at 20.62. A drop below the support at 20 will invalidate the bullish outlook.
