The GBP/ZAR price crashed to the lowest level since July 6th as investors waited for the upcoming UK GDP data. The GBP to rand exchange rate dropped to a low of 19.80, which was about 3.98% below the highest level this year.
UK GDP data
The GBP to ZAR exchange rate dropped sharply as the British pound weakened across the board. The pair dropped as investors focus on the upcoming UK GDP numbers. Economists polled by Reuters expect the data to show that the country’s economy contracted by 1.2% in June after rising by 0.5% in the previous month.
They also expect the data to show that the country’s economy contracted by 0.2% on a quarter-on-quarter basis. This then translates to a year-on-year expansion of 2.8%. The Office of National Statistics (ONS) will also publish the latest UK construction output, manufacturing production, and trade data.
The GBP/ZAR price decline continued after last week’s Bank of England (BoE) decision. In it. The bank decided to hike interest rates by 0.50%. In the accompanying statement, the bank’s governor warned that the economy will move to a recession in the fourth quarter. Therefore, there is a possibility that the bank will slow its rate hikes policy in the coming months.
GBP/ZAR price forecast
The four-hour chart shows that the GBP to ZAR price continued dropping this week. It dropped to a low of 19.70, which was the lowest level since July 5th. On the four-hour chart, the pair dropped to the 50% Fibonacci Retracement level. It has dropped below the 25-day and 50-day moving averages while the MACD has moved below the neutral point.
Therefore, the pair will likely continue falling as sellers target the key support at 19.62, which was the lowest point on June 29th. A move above the resistance point at 19.92 will invalidate the bearish view.
