The GBP/ZAR price moved sideways on Thursday as the market reflected on last week’s SARB rate decision and the upcoming one by the BoE. The pound to rand exchange rate was trading at 20.30 on Thursday morning. This price was about 1.71% below the highest point last month.
BoE and SARB rate hikes
The GBP/ZAR price rose slightly after the South Africa Reserve Bank (SARB) decided to hike interest rate by 75 basis points in a bid to fight the soaring inflation. This hike was much bigger than what most analysts were expecting. Further, the rate hike was the biggest one since 2002.
It came a day after data from South Africa showed that the headline consumer price index (CPI) rose to the highest point in 13 years. The month-to-month inflation rose by 1.1% while core inflation that excludes the volatile food and energy products rose by 4.4%.
The pound to rand price will next react to upcoming South Africa’s producer price index (PPI) that will come out on Thursday. Analysts expect the data to show that the headline PPI rose from 14.7% to 15.8% in June. On a month-on-month basis, they see producer prices rising by 1.7%.
The next key catalyst for the GBP to ZAR price will be next week’s Bank of England decision. With the UK inflation at a 3-decade high, the bank is expected to hike interest rates by 0.50% for the first time in decades. Unlike other major central banks, the BOE has focused on delivering standard 0.25% hikes this year.
GBP/ZAR forecast
The four-hour chart shows that the GBP to rand price has been in a strong bullish trend in the past few weeks. It has risen by about 7.1% from its lowest level in June of this year. This rally faded last week when SARB decided to deliver a jumbo rate hike. It is now trading at 20.30, which is lower than this month’s high of 20.62.
The GBP/ZAR price is slightly above the 23.6% Fibonacci Retracement level while the Relative Strength Index (RSI) has moved to the neutral point at 50. Therefore, the pair will likely continue rising as bulls target the highest point this month at 20.62. A drop below 20.20 will invalidate the bullish view.
