The pound to rand (GBPZAR) pair is down by about 0.60% ahead of the South Africa Reserve Bank (SARB) interest rate decision tomorrow. The pair is trading at 20.8235, which is lower tan this week’s high of 21.1472. The South African rand has also gained by 0.25% against the US dollar and the euro.
Rand gains ahead of SARB interest rate decision
The South African central bank will release its interest rate decision tomorrow. Analysts expect that the bank will slash interest rates from the current 3.75% to 3.50%. If this happens, it will be the fifth interest rate cut this year. The rates started the year at 6.50%.
The decision will come at a time when the number of coronavirus cases in the most advanced African country is rising. The country has confirmed more than 381,000 cases and more than 5,300 deaths. And the number is still rising. Also, the decision comes at a time when the government has launched more measures to curb the spread, including putting a ban on alcohol sales.
The GBPZAR pair is possibly falling because of foreign inflows as the country’s stocks rise. According to Bloomberg, stocks have rebounded by more than 50% after bottoming in March. In a statement, an analyst told Bloomberg that:
“The enormous rally has been fueled by hopes of a vaccine, but primarily by global central banks stepping up, providing almost unbelievable stimulus packages and reassuring markets that they are here to provide liquidity.”
GBPZAR technical forecast
The pound to rand pair is trading at 20.8235. On the daily chart, this price is below the 50-day and 100-day exponential moving averages. It is also below the 50% Fibonacci retracement level. This retracement connects the highest and lowest levels this year. The pair is also attempting to move below the June 10 low of 20.8100.
Therefore, it seems that bears are in total control, which means that the price is likely to continue falling as bears test the 61.8% retracement level at 20.3320. On the flip side, a move above the 50-day EMA at 20.300 will invalidate this trend.