Pound to Rand Rallies After Bank of Japan Exercises Moderation; Global Concerns Ease

Ever sensitive to global risk trends, the South African rand kept pushing higher on Friday after the Bank of Japan (BOJ) underwhelmed investors with its stimulus offering, indicating a more optimistic outlook.

GBP/ZAR rallied a quarter of a percent on Friday after the BOJ resisted unveiling the stimulus bazooka markets had been expected, optining instead for small changes to their current programme.

The South African rand - which had been expected to be affected by the event - rose as the light touch in Tokyo revealed a more benign outlook for global economic conditions, which was supportive of emerging markets. 

The pound to rand pair was trading at 18.6700 at the time of writing, up from 18.59 at the end of the previous day.

Technical Outlook -  18.00-50 eyed

From a chart perspective there is little change in the GBP/ZAR.

The pair still remains overall bearish-looking.

Latest Pound / SA Rand Exchange Rates

	Live: 22.6082▼ -0.19% 12 Month Best: 25.4721
*Your Bank's Retail Rate	21.8395 - 21.9299
**Independent Specialist	22.2917 - 22.3821 Find out why this is a better rate

* Bank rates according to latest IMTI data.

** RationalFX dealing desk quotation.

 

The dominant down-trend from the 23.00 May highs is still intact.

The three part move down which ended at the 18.65 July lows, is a 'measured move'.

Normally markets reverse at the end of measured moves, but in this case the exchange rate has resumed its descent, after breaking below the 18.6596 lows.

The down-trend is expected to extend, despite the completion of the measured move, with the next target at 18.00.

The lack of bearish momentum after the break lower, however, could indicate downside may be stunted, so we remain marginally bearish, but still bearish nevertheless.

Looking at the four chart of the pair, and the exchange has clearly entered a sideways market consolidation, with the ceiling at 19.010 and the floor at 18.6400.

A break below the floor is most probable, given the generally bearish tenor of charts on the higher timeframes.

Thus a break below the 18.60 level would provide confirmation, with an initial target at 18.5000, and then potentially the longer-term target at 18.0000.

UK House Prices support pound

UK House Prices continued to show growth, even in the teeth of Brexit, on Thursday, although commentators underlined the fact that the elevated prices were in part due to unrealistic asking prices.

Garrington Property Finders, Managing Director, Dominic Hopper, said: "While you can't read too much into the July house price rise, what is certain is that there hasn't been a crash in property prices since Brexit, more of a soft landing.”

But he went on to add:

"Sellers, however, are refusing to budge and are in a Mexican standoff with would-be buyers. The gap between what they are prepared to sell at and what the buyer is prepared to offer is widening.”