The Pound to Rand exchange rate is on the short end of the market, with price action on the GBPZAR dropping for the 2nd day in a row, as the South African Business Confidence index shows a recovery in data presented this morning.
South African Business Confidence rose from 77.8 a month ago to 82.8 as at today. This news release provided the impetus for the pushback by the South African Rand against the British Pound, allowing the GBPZAR pair to drop 0.9% on the day.
The Rand also got some uplift from retails sales data, which showed an improvement over the previous month’s data, rising from -11.9% to -7.5% on an annualized basis. These positive news items show a little bit of light in what has been a tremendously dark period for the Rand.
Technical Outlook for GBPZAR
The downside move on the Pound to Rand exchange rate is expected to challenge the support that is formed at 22.42434, which lies very close to the 23.6% Fibonacci retracement from the swing low of 24 December 2019 to the swing high at 23 April 2020. RSI has emerged from the overbought zone and is heading to the midline, just at the same time that the top of 10 August failed to make the high of 23 April. This indicates that the uptrend may have stalled for now.
A breakdown of the 22.42432 support is required to extend the drop in the GBPZAR, sending the pair on a potential collision with 21.58047, where tops of June-early July 2020 can be found.
On the flip side, a bounce on the 22.42432 support allows the pair to create a retest opportunity on the 23.35124 resistance. A clearance of this area challenges the 23 April high at 23.67455. This is the price level that needs to give way to re-establish the higher high that confirms the resumption of the uptrend.