The Pound to Rand Exchange rate got a boost this Thursday after the Bank of England (BoE) announced an expansion of its bond-buying scheme by £150 billion to £895 billion. This expansion exceeded the market estimates of an increase of £100 billion. The BoE also kept rates unchanged, staving off market expectations of a dive into negative interest rate territory.
The bounce on the GBPZAR remains capped, as the pair experiences headwinds from the stall in Brexit talks on Wednesday. The Pound could remain vulnerable to other headlines from the Brexit talks.
The Pound to Rand exchange rate remains lower on the week, trading 0.51% lower.
Technical Levels to Watch
The weekly chart of the GBPZAR shows a bounce on the weekly candle. This move represents the slight upside in Thursday’s Pound to Rand exchange rates, as a result of the BoE’s action.
The descent of the GBPZAR as a consequence of the breakdown of the descending triangle remains intact. Only a price advance that builds on the bounce of today to take the Pound to Rand rate above the 21.0000 psychological resistance (lower edge of the triangle) invalidates the downside move. This allows 21.61131 (38.2% Fibonacci level) to come into focus, as well as 22.05446 (28 September high) and 22.40090 (23.6% Fibonacci retracement), which act as further targets to the north.
Continuation of the price decline in the GBPZAR targets the 61.8% Fibonacci level at 20.33500 as the initial target. Any subsequent breakdown of this area extends the downside move towards 19.68257, with 18.88563 (88.6% Fibonacci retracement) serving as the price projection point that completes the measured move from the triangle’s breakdown.