The GBP/ZAR price rose to the highest point since March, ahead of the upcoming interest rate decision by the South African central bank. The pound to rand pair is trading at 20.50, which is almost 10% above the lowest level this year. However, this price is about 5.8% below the highest point in 2021.
SARB decision
The GBP to ZAR exchange rate continued rising on Thursday morning as the market waited for a giant rate hike by SARB. Economists expect that the bank will deliver a 50 basis point rate hike as it continues battling the soaring inflation. As such, it will push interest rates from 4.75% to 5.25%, which will be significantly higher than the pandemic-era low of 3.50%.
This decision will come a day after South Africa published strong consumer inflation data. The headline CPI rose from 6.5% to 7.4%, which was the highest level since 2009. Core inflation, which excludes the volatile food and energy products, rose from 4.1% to 4.4%. Analysts expect South Africa’s inflation to continue rising in the coming months.
The GBP/ZAR price also rose as investors reacted to the latest UK inflation data. According to the Office of National Statistics, the country’s inflation surged to a multi-decade high of 9.4% as the cost of food and energy rose. This means that the UK has the highest inflation rate among G7 members.
The Bank of England (BoE) will likely hike interest rates by 50 basis points when it meets on August 4th. The GBP to rand price is also rising as the political climate in the UK changes. With Boris Johnson set to step down as prime minister, the next leader will be Rishi Sunak or Liz Trus.
GBP/ZAR forecast
The daily chart shows that the GBP/ZAR price has been in a strong bullish trend in the past few weeks. The current price is slightly below the 61.8% Fibonacci Retracement level. The upside is also being supported by the 25-day and 50-day moving averages, while the Relative Strength Index (RSI) has moved above the overbought level.
Therefore, the pair will likely retest the support at 20.27 after the SARB decision. This will be a bullish sign since it is a break and retest pattern. If it happens, the pair will then rise to the important resistance at 21. A drop below the support at 20 will invalidate the bullish view.
