2023-03-07 07:08:32 ET
price rose for the third straight day after the relatively weak South African GDP data. It also jumped after mixed messaging about the pace of Bank of England (BOE) interest rate hikes. The exchange rate soared to 22.03, which was a few points below this month’s high of 22.33.
South Africa GDP data
The South African economy remained under pressure in the fourth quarter as power shortages intensified. Data by the statistics agency showed that the economy contracted by 1.3% on a quarter-on-quarter basis. It eked a small 0.9% expansion on a YoY basis, which was lower than the median estimate of 2.2%.
Experts believe that the South African economy will continue contracting this year considering that the power issue has not been solved yet. Another challenge is that the strong
is hurting emerging and developed countries.
South Africa’s president, Cyril Ramaphosa, decided to reshuffle his cabinet this week in a bid to handle the ongoing challenges. He appointed Ramokgopa to become the new infrastructure and investment docket that is tasked with solving the energy crisis
A key issue is that Eskom is overseen by several ministries: Mineral Resources and Public Enterprises. The latter is tasked with overseeing Eskom, the embattled power monopoly. Eskom is itself highly bureaucratic, with the former CEO expressing concerns about whether it can be saved.
The GBP/ZAR price also reacted to the latest
home price numbers. Data by Halifax showed that house prices rose by 1.1% in February after increasing again in January. This is the fastest growth rate since June last year. The average house price in the UK costs about 285,476 pounds.
In a statement, a BOE official warned that the bank will continue hiking interest rates. She nonetheless said that the pound could fall further. She
“There has been a quite a hawkish tone coming from the Federal Reserve and ECB. An important question in regards to the pound is how much of that existing hawkish tone is already priced into the pound. If Fed hawkishness is not priced in, the pound could fall further.”
The GBP/ZAR price has successfully formed a break and retest pattern by moving to the key support level at 21.76. This was an important level since it was the highest point in November 2021 and January 2022. In most periods, this pattern is usually a bullish sign. The pair is still being supported by the 50-day and 100-day moving averages.
The GBP to ZAR price is being supported by the 50-day and 100-day moving averages and the MACD indicator. Therefore, based on the Murrey math lines, we estimate that the pair will continue rising and hit the key resistance point at 22.32. The stop-loss of this trade will be at 21.76.
GBP/ZAR regains momentum as UK, South Africa diverge
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