The Pound to Rand exchange rate will be subjected to great scrutiny in the coming week as South Africa starts to initiate the process of easing the coronavirus-induced lockdown of the country this weekend. This move is coming a few days after the Standard and Poor’s rating agency downgraded the credit rating of the country to junk status.
After five weeks of a lockdown in Africa’s most industrialized nation, the country has decided to ease restrictions by allowing some businesses to reopen. Beset by severely weakened economic conditions, it has become apparent that South Africa can no longer bear the financial cost of the lockdown.
The country has the highest COVID-19 toll with 5951 cases and 116 deaths. In a May Day speech, President Cyril Ramaphosa said that the pre-existing challenges had “exacerbated by the pandemic”, urging South Africans to be vigilant and careful as the process of easing the lockdown and returning to work begins.
Surveys conducted in South Africa, Nigeria and several emerging market powerhouses in Africa indicate that most people are less concerned about the coronavirus pandemic than they are of being able to make a living.
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GBPZAR Outlook for Next Week
The Pound to Rand rates have gone up in recent weeks and made another push to the upside on the back of the credit rating downgrade. Presently, the price is testing the resistance at 23.67455, even though the past two weekly candles are pinbars. This resistance has held for the past five weeks, and a possible rejection which may have some bearish consequences cannot be ruled out. A failure of the GBPZAR to push ahead of this resistance may allow bulls to take profits, which could lead to a dip in the Pound to Rand rate. Such a retracement dip targets the 23.35124 support, with the 22.0000 and 21.58047 in view as well.
A break of the 23.67455 support allows the GBPZAR to advance towards 24.42730, which forms the next available upside target. If the advance continues, the GBPZAR could test the all-time highs of 25.15624.
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