The pound to rand (GBPZAR) pair dropped today as the market refocused on the slow pace of the ongoing Brexit negotiations. The pair also dropped as the South African rand rose due to the ongoing reopening process.
GBPZAR reacts to stalled Brexit talks
According to Bloomberg, the third round of Brexit talks are not yielding the desired results. The EU and the UK have ratcheted their disagreements and there are signs that no progress will be made. The UK has notably refused to accept the conditions the EU wants in return of a deal.
They have also refused to find a compromise on key issues like fisheries and the European Court of Justice. Worse, the two sides are still disagreeing on the compromises they have already made.
In a statement yesterday, a spokesperson of David Frost reiterated that the UK was not seeking anything special from the European Union. Instead, the country just wants a free trade agreement that is “based on precedent and similar to those the EU has with other countries.” By other countries, he was talking about Canada, a country that has a FTA with the EU. On its part, the EU has said that a Canadian-style deal is not feasible because it will be unfair to EU companies.
South Africa starts to reopen
The pound to rand pair is also reacting to the plans of the South African government on reopening. The government has said that it will soon move to the third phase of reopening, which will allow many companies to do business. According to Bloomberg, most restrictions will be ended in the end of the month. The president said:
“If we lift the lockdown too abruptly and too quickly, we risk a rapid and unmanageable surge in infections.”
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Pound to rand technical outlook
On the daily chart, we see that the pound to rand (GBPZAR) pair formed a strong triple top pattern at 23.6980 this month. The pair has been on a downward trend and is now approaching the 23.6% Fibonacci retracement and the 50-day EMA level at 22.1710. Therefore, bears seems to be in total control, which means that the price will continue falling.
On the other hand, a move above the psychological level of 23.00 will mean that there are still buyers in the market. This will likely see the price move to retest the YTD high of 23.6980.