Today provided an opportunity to test a combination of an emerging market currency and a major currency. The Pound to Rand exchange was higher today, despite an improvement in the South African manufacturing production index. This data piece saw the index come in at -2.6%, which was better than expected (-7%).
However, the improvement in the Claimant Count rate was what traders decided to focus on, allowing for some profit-taking on the GBPZAR. As a result, the Pound to Rand exchange rate, which had been beaten down over the last several weeks due to Brexit woes, has seen a 0.49% upside push on the day.
Technical Levels to Watch
Last week’s significant drop sent the Pound to Rand exchange rate tumbling towards lows not seen since March. The GBPZAR also fell today towards the support at 20.35410, but profit-taking on the day has allowed for a bounce.
The pair remains under pressure, and a break of the 20.35410 support opens the door towards 19.68257, with 18.88563 (88.6% Fibonacci retracement) lining up as an additional support target.
On the flip side, the triangle’s lower border at the 21.0000 psychological level remains the initial target. 21.61131 is another target to the upside.
Attainment of this new target invalidates further measured moves from the triangle’s border to the downside. Otherwise, rejection at 21.0000 continues the downside move that follows the breakdown of the descending triangle.
GBPZAR Weekly Chart