- Summary:
- The GBPZAR pair dropped as the number of Coronavirus cases continued to increase in the UK. Pound to rand could drop before it starts to rise again.
The pound to rand pair was little changed today as the market reflected on the situation in the UK and South Africa.
In the UK, Boris Johnson, the prime minister remained in the ICU for the third day. He was diagnosed with coronavirus two weeks ago. In his absence, Foreign Secretary, Dominic Raab is handling day-to-day government business.
Another big news from the UK was that Tesco reported better-than-expected earnings. Sales of the retailer rose by 30% in the first few weeks of March as people rushed to stockpile. Still, the company expects sales to flatten as the situation normalizes. Also, the company said that it could suffer from increased costs. This news came two days after Debenhams, another retailer announced that it was moving into administration.
At the same time, the United Kingdom is seeing more coronavirus cases. Just yesterday, the country reported the highest number of deaths in a single day. More than 786 people died while according to CNN, the number could be higher.
Meanwhile, the South African economy is hurting from the lockdown that was unveiled a month ago. Many companies have issued forward warning while many mines and factories have remained shut. This could worsen the situation for a country that was already in a recession. On a positive note, many retail landlords have given reprieve to many retailers, provided that they retain their workers. This could reprieve them the pressure of paying back the rent. South Africa has reported more than 1,700 coronavirus cases.
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Pound to Rand Technical Analysis
The GBPZAR pair has been falling since Tuesday, when it peaked at 23.6570. Looking at the two-hour chart, we see that the pair is in the corrective wave of the Elliot Wave pattern. The pair is also between the 23.6% and 38.2% Fibonacci Retracement level.
In most cases, when this correction happens, the first level to watch is the 38.2% Fibonacci level. In this case, this level is at 22.10. Therefore, a bearish pattern will likely remain if the pair continues to trade below the 23.6% level of 22.71.
On the flipside, the pair could also resume the upward trend before it reaches 22.10.