The pound to rand (GBPZAR) pair is down by 0.52% as investors returned to the South African rand. The USDZAR pair is down by more than 0.72% while the EURZAR pair is down by 0.25%. The decline today is the first time the currency has declined in ten days.
The South African rand and other emerging market currencies have been under pressure in the past few weeks. This weakness is mostly because investors have realized that emerging markets will have a difficult time than their developed world counterparts. Among the worst-performing of these currencies are the South African rand, Turkish lira, and Brazilian real.
In South Africa, the number of coronavirus cases has been rising which has forced the government to implement more cautionary measures. At the same time, economic numbers have been discouraging. The unemployment rate is at an all-time high while the manufacturing sector is struggling. And, analysts expect that worse is yet to come.
On a positive side, the government has received bids for some of its investments. Also, it has received substantial funding from the World Bank.
On the other hand, the GBPZAR pair is reacting to the mixed employment data from the UK. Data released today showed that the UK’s unemployment rate remained unchanged at 3.9%. The country’s payrolls declined by a record 220k in the second quarter after rising by 6k in the first quarter. At the same time, wages declined by 1.2% in June.
GBPZAR technical forecast
The GBPZAR pair is trading at 23.00, which is slightly below yesterday’s high of 23.2550. On the daily chart, the price is above the 23.6% Fibonacci retracement level and above the 50-day and 100-day exponential moving averages. The RSI has moved from the overbought level of 78.9 to the current level of 72. Also, the price seems to be forming a cup and handle pattern, which means that the price is likely to continue rising to the next resistance at 23.7076.
On the flip side, a move below the 23.6% Fibonacci retracement level at 22.3467, will invalidate this trend.