On a day of numerous market-moving data releases, we shift towards the emerging markets, where the South African Rand featured prominently on the radar in the Pound to Rand pairing following the release of its quarterly employment data.
South African unemployment rate registered at 30.1%, which exceeded the market expectation of 29.71%. Total unemployment figure of 7.1million, which was more than the previous number of 6.9million.
Though the figures were worse than expected, the markets had priced in the outcomes, as the South African economic indices have been worsening for several months. South Africa has the highest coronavirus case count in Africa, which has further complicated the employment situation as companies and business were shut down to contain the spread of the virus.
Download our Q2 Market Global Market Outlook
Outlook for GBPZAR
With the US Dollar performing poorly in the markets so far, attention of traders has to shift to the Pound to Rand pairing, where we can see the pressured Rand being paired with the bullish Pound. The GBPZAR is presently trading in a saucer pattern (bullish pattern), with price trading at 21.7429 (0.18% higher).
With more data coming out of both countries later in the week, the Pound to Rand exchange rate could be poised for a huge move. A breakout above the saucer pattern targets the 22.2084 resistance target (9 March and 31 March 2020 highs), with a potential to attain 22.48796 if the price projection from the breakout achieves the measured move from the saucer’s most significant depth to its lid.
On the flip side, positive data from South Africa along with negative UK data could swing the pendulum in favour of the former, sending the Pound to Rand rate below the saucer’s sides to target the 21.0125 price level. Further decline could bring in 20.37574 into the picture, but the fundamentals of both economies make this a far-fetched proposition for the near-term, even though this cannot be ruled out. A decline below 21.0125 increases the certainty of this move.
Don’t miss a beat! Follow us on Telegram and Twitter.
More content
- Download our latest quarterly market outlook for our longer-term trade ideas.
- Follow Eno on Twitter.
- Do you enjoy reading our updates? Become a member today and access all restricted content. It is free to join.