A weakened British Pound is slightly gaining on the South Africa Rand today, after South Africa’s Consumer Price Index grew to 3.2%, which marginally exceeded expectations of a 3.1% growth. The previous reading was 2.2%. The core component of the number also came out at 3.2% Year-on-Year, exceeding estimates of 3.0% and even higher than the previous number of 3.0%.
The Pound to Rand exchange rate had declined earlier this week, as Brexit fears weighed on the Pound. Also, there had been rumours about the future of Prime Minister Boris Johnson, after reports emerged that he was suffering the after-effects of the coronavirus and could resign in as early as six months. However, this rumour has been dispelled by 10 Downing Street.
The GBPZAR is trading at 22.20940, 0.3% higher on the day after the Pound gained modestly following the quelling of the rumours of the UK PM’s possible resignation.
Technical Outlook for GBPZAR
The Pound to Rand daily chart shows that the pair has bounced off the 22.05446 support line (1 April 2020 low), after yesterday’s pinbar candle found support at that price level. If the bounce is maintained, this snaps the 3-day losing streak and refocuses the pair to target the 22.42432 resistance (13 April, 12 May lows). Further advance brings the 23.0000 psychological resistance (8 May and 18 August highs) into focus.
Conversely, if bearish pressure kicks in and allows the Pound to Rand pair to bulldoze through the 22.05446 support, then 21.58047 becomes the net logical support level. Below this area, the pair may also find support around 20.97316 (50% Fibonacci retracement from the swing low of 26 December 2019 to the swing high of 23 April 2020). The 61.8% Fibonacci price level at 20.33500 (2 March 2020 highs and 25 March 2020 lows) makes up another possible target to the south, attainable on Pound weakness as opposed to strength in the ZAR, whose economy is lacking bullish fundamentals at this time.