The Pound to Rand exchange rate is 1.2% lower today as the market attempts to take out support at the 22.00 level.
The Rand saw buyers emerge after a registering higher-than-expected inflation figures on Tuesday. The market was looking for a 3.1% number after last month’s 2.2% and the figure came in at 3.2%. This has helped to buoy the South African currency on the potential for a hike in rates in the near future, whilst the U.K. goes the opposite way and considers negative rates.
South Africa’s has struggled with the coronavirus outbreak this year as the country has the fifth-highest number of cases in the world, and the highest number on the African continent. A study by the UNDP said that the country’s economy could take up to five years to recover from the hit to GDP.
South Africa has also been dogged by allegations of corruption over its stimulus package, with critics saying that contracts are being handed out to family members, whilst funds meant for unemployment insurance made their way into the hands of politically-connected individuals. South Africa had one of the strictest lockdowns in March, before enacting a 500bn Rand ($30bn) stimulus package. For the near-term, it looks like the market is ignoring the GDP and virus cases to focus on interest rates and inflation.
GBPZAR Technical Outlook
The move lower today is looking to test last week’s low under the 22.00 level. If this is breached then the trendline resistance at 21.50, but the real support comes in around 21.00. The 22.50 resistance would be the hurdle for another bullish move. If you want to find out more about support and resistance areas for risk management then try the Investing Cube Trading Course or one-to-one coaching.
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GBPZAR Daily Chart
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