The pound to rand pair rose today as traders reacted to a spike in Coronavirus cases in South Africa. According to the health minister, the number of cases jumped to 709 overnight. This was a significant increase since the country had 554 confirmed cases on Monday.
The news came on the same day that the country started a nationwide lockdown that will last for the next three weeks.
Investors are bracing for a difficult time for the South African economy, which was going through a recession even before the Coronavirus outbreak. As a result, investors expect that Moody’s, which has been watching the country, will move fast to downgrade its debt.
South Africa is also seeing high unemployment rates and its key industries are struggling. Gold miners are shutting down while the country’s monopoly power company, Eskom, is on brisk of bankruptcy. South African Airlines, the country’s main aviation company too has little chances of surviving the current crisis.
As a result, USDZAR and EURZAR have declined by more than 20% this year.
UK February CPI Report
Meanwhile, the UK released some interesting inflation numbers today. Data from the statistics office showed that inflation picked up in February as the Covid-19 disease started to spike. The headline CPI and core CPI jumped by 0.4% and 0.6% respectively. The rate will likely continue to increase as the Bank of England keeps interest rates low and starts to print money.
Read our Best Trading Ideas for 2020.
Pound to Rand Technical Analysis
On the hourly chart below, the GBPZAR pair is on an upward trend and is within a clear channel. The pair is now rising from the support level and it seems headed towards the important resistance level of 21.000. The pair will remain bullish if it is able to stay above 20.800, which is another crucial resistance level.
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