The pound to rand (GBPZAR) pair is little changed today as traders react to strong house price index data from the United Kingdom. The pair is trading at 22.3375, which is slightly higher than the intraday low of 22.2050. On the other hand, the USDZAR pair is up by 0.45% while the EURZAR pair is up by just 0.10%.
The pound to rand has been in a consolidation phase in the past few days. Today, the pair is reacting to positive economic data from the UK. According to Nationwide, the house price index rose by 3.7% in August. That was higher than the consensus estimates of 2.0%. It was also higher than the previous month’s 1.5%.
On a month-on-month basis, the house price index rose by 2.0%, which was higher than the 0.5% that analysts were expecting.
The rebounding house prices is a positive thing for the UK economy, which has been rebounding after bottoming in March and April. Just yesterday, data from the Bank of England showed that mortgage approvals rose to 66k in July as mortgage lending rose to £2.7 billion. Another data from Markit showed that the manufacturing PMI increased to 55.2 in August.
At the same time, the South African rand has been in an upward trend against key currencies like the dollar and euro. Yesterday, data from South Africa showed that the manufacturing PMI increased to 57.3 in August from the previous 51.2.
Pound to rand technical outlook
The daily chart below shows that the pound to rand (GBPZAR) pair has been in a downward trend since August 6, when it reached a high of 23.2625. It reached a low of 21.9645 on August 25 and has been struggling to go back up.
The price has remained above the 50-day and 100-day exponential moving averages. At the same time, the signal and main line of the MACD have been moving lower, a signal that the pair is likely to continue falling.
Therefore, I suspect that the price will continue falling as bears target the next support level at 21.000. On the flip side, a move above the psychological level of 23.00 will invalidate this trend.