GBPZAR News

The pair of the Pound to Rand (GBPZAR) is presently trading in a long-term consolidation pattern. This pattern is a rising wedge, whose upper border has made contact with the 38.2% Fibonacci retracement line which was formed from the June 2011 swing low to the February 2016 swing high on the monthly chart. The start of the week will be lean for the British Pound data-wise, with action only starting to kick in as from Wednesday with the CPI (annualized) data. Thursday will see the release of the UK Retail Sales, while Friday will see a double bill: the Flash Manufacturing and Flash Services PMI data. The Rand has not had an excellent start to the year, and it continues to struggle as the South African economy battles with an ailing public power company which was bailed out by the government in a rescue package announced late last year. The interest rate was cut at the previous SARB meeting, allowing the Pound to Rand pair to push up to 19.5269. Read our Best Trading Ideas for 2020. Technical Outlook for Pound to Rand Pair The January monthly candle on the Pound to Rand pairing breached the upper border of the rising wedge. Still, the bearishness of the British Pound has ensured that the Pound to Rand exchange rate has effectively dropped down within the wedge. The technical expectation for the Pound to Rand pair (GBPZAR) is for the price to break below the wedge. Therefore, we would wait to see if the monthly candle remains within the wedge or not, and critical to this remains the numbers from this week’s data releases out of the UK. If the GBPZAR stays within the wedge, then the price is set up to make another run to the lower border of the wedge which nestles against the 17.8846 (50% retracement level) price area. It will require a 3% closing penetration below the wedge to confirm the breakdown of the pattern, with the long-term targets being the multi-month lows of May 2014 to April 2015 at 17.1402. This area is also the price level where July 2018 and August 2019 monthly candles made lows. Further south lies the 61.8% Fibonacci retracement at 16.1524. On the flip side, strengthening of the Pound to Rand exchange rate could take the GBPZAR above the wedge, which then invalidates the pattern and opens the door for further upside towards 20.3541 and possibly the 23.6% Fibonacci retracement level at 21.7598. These are all long-term targets, and it is possible that a lot of range trading may occur along the way between the defined support-resistance price levels.

GBPZAR

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