GBPZAR was flat on the day as the market awaits the SARB central bank meeting. The pound has seen a two-day bounce against the Rand and this was helped by lower retail sales from South Africa yesterday.
The retail sales number came in at -2.7% after last month’s 4.1% gain and this saw weakness in the Rand. The market will now look to this afternoon’s interest rate decision from the SARB with traders looking to see if they will hold rates at 3.5%.
The South African Central Bank is likely to hold rates steady with the inflation rate dipping over the last few months from 3.2% to 3%. The recent 17% drop in GDP will also see the bank hesitant to place any constraints on the economy and their next move would probably be a cut.
The pound has seen a three-month downtrend since the Brexit picture turned sour and the U.K. has also struggled with the virus situation, so the GBPZAR may see a bounce on the rate picture, but it’s hard to see a long-term trend change at present.
GBPZAR has bounced from the lows near 20.00 in a double bottom formation but needs a move through 21.00 to solidify the move. If the pair can get above the moving average around 21.20 then the resistance levels to 22.00 are possible. We have broken the trendline so the risk is still to the downside. The Investing Cube team is currently available to help all levels of traders with the Forex Trading Course or one-to-one coaching.
