Sign In  |  Register  |  About Walnut Creek Guide  |  Contact Us

Walnut Creek, CA
September 01, 2020 1:43pm
7-Day Forecast | Traffic
  • Search Hotels in Walnut Creek Guide

  • ROOMS:

GBP/ZAR: The great South African rand comeback is underway

By: Invezz
South African rand

The pound to rand (GBP/ZAR) exchange rate deep sell-off continued on Wednesday after the UK published strong consumer inflation data. The pair slipped to a low of 22.78, the lowest point since July 31st. It has plunged by about 7.60% from the highest point this year.

South African rand continues

The African rand is doing something it has not done in years. The currency has gained against sterling for seven straight days as its strength continues. ZAR has also gained against the US dollar and the euro.

The GBP/ZAR continued its sell-off even after the UK published strong consumer and producer inflation data. According to the Office of National Statistics (ONS), the headline consumer price index (CPI) rose from 0.3% to 0.5%.

This increase translated to a year-on-year gain of 6.7%, higher than the median estimate of 6.6%. Core inflation, which strips the volatile food and energy prices, rose from 0.1% to 0.5%. It stood at 6.1% on a YoY basis. 

These numbers mean that the UK’s cost of living crisis is continuing, putting pressure on the Bank of England (BoE). The bank has maintained a hawkish tone in the past few months as it tries to engineer a soft landing.

Analysts believe that the BoE will leave interest rates unchanged in the coming months. Further rate hikes could make the ongoing stagflation worse. In a report last week, the IMF warned that the UK will be the slowest economy in the G7.

The next important catalyst for the GBP to ZAR rate will be the upcoming South Africa inflation data. Economists polled by Reuters expect the data to show that the headline CPI rose from 4.8% in August to 5.3% in September. Core inflation is set to drop to 4.7%.

GBP/ZAR technical analysis

GBPZAR chart by TradingView

The pound to ZAR rate peaked at 24.74 in June as the South African rand tumbled. It then dropped to 22.50 in July and bounced back to 24.50. Now, it seems like bears are gaining control once again. It has flipped the psychological level of 23.00 and the lowest level this month into a support.

The pair has also dropped below the 25-day and 50-day moving averages while the Relative strength Index (RSI) has dropped below the support at 50. Therefore, the outlook for the pair is bearish, with the next level to watch being at 22.50. A break below that level will see it fall to 21.85.

The post GBP/ZAR: The great South African rand comeback is underway appeared first on Invezz.

Data & News supplied by
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
Copyright © 2010-2020 & California Media Partners, LLC. All rights reserved.