The pound to rand (GBPZAR) pair rallied by more than 100 basis points even as the UK released weak February retail sales data. The numbers from the Office of National Statistics (ONS) showed that retail sales declined by -0.3% in February, mostly because of floods and transport disruptions. This decline was lower than the consensus estimates of a 0.2% gain.
Similarly, the core retail sales, which excludes the volatile food and energy products, declined by 0.5% after rising by 1.8% in January.
Perhaps, traders are focusing on the South African lockdown, which started two days ago. As I had written before, South Africa, which was in a recession before the Coronavirus crisis is more vulnerable than the UK.
Bank of England in Focus
Most importantly, traders are focusing on the Bank of England (BOE), which will release its monetary policy decision at midday, London time. The bank, which has joined other central banks in a coordinated easing program, is likely to signal that it was ready to provide more support to the economy. This is after the bank has made two emergency rate cuts this month alone. The bank is not expected to cut rates today, according to a survey by Refinitiv.
Meanwhile, as Angeline wrote earlier today, the UK government is expected to unleash a large fiscal package that will see it pay salaries for most workers.
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Pound to Rand (GBPZAR) Technical Analysis
On the two-hour chart, we see that the pair has been on a bullish trend since March 19. During this surge, the pair has been in a strong channel, with clear to identify support and resistance. Yesterday, the pair attempted to move below the support, which turned out to be a false breakout. The price is now along the 61.8% Fibonacci Retracement level. While I expect some volatility ahead of the BOE decision, I expect the rally to continue and for the pair to test the 78.2% Fibonacci level at 21.23.