The Pound to Rand rate has spiked after a shocking drop in several indices used to assess the state of the manufacturing and mining sectors in South Africa. 2.13% on the day after the South African Manufacturing Production Index slumped by -1.2% (previous -2.6%) on a month-over-month basis, and fell from -2.1% to -5.4% in April on an annualized basis.
Mining production also fell from -17.9% to -34.1% on a month-over-month basis, and from -18.0% to -47.3% on an annualized basis. Gold production also witnessed a very steep drop, with the annualized number falling from 9.5% to -59.6%.
The shocking statistics indicate just how badly the coronavirus pandemic has hit the country. With 55,421 coronavirus infections and 1,210 deaths, South Africa has the highest coronavirus pandemic burden in Africa. Industries, schools and workplaces were placed on a lockdown which lasted more than a month before a partial reopening was ordered two weeks ago.
The GBPZAR is trading at 21.5084 as at the time of writing, which halts a month-long correction on the pair.
Download our Q2 Market Global Market Outlook
Technical Outlook for GBPZAR
The Pound to Rand rate The pair had broken out of the channel on the weekly chart and reached a high of 23.67455 before it underwent a correction to the support formed by the channel’s return line. The price is presently testing the resistance at 21.58047, where previous highs of Aug-Oct 2015 and 9 March 2020 are located. A break above this area allows the uptrend to resume, targeting 22.56688 and possibly 23.35124. 23.67455 and 2442730 may become relevant if further advance on the pair is seen.
On the flip side, failure to break above 21.58047 allows the pair to retest the channel’s upper border, with possible downside targets at 20.35410 (18 April 2016 low) and 19.68257 remaining relevant to price action if there is a further decline.
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.