GBPZAR Forecast highlights:
- GBPZAR trading sideways between the 22.4-24.0 range
- Supply/demand evenly balanced within this band; pattern expected to persist
- Watch to buy GBP on a drop below 23.0
How has GBPZAR performed recently?
GBPZAR is not a trader’s currency. For most of the last 18 months the rate has been bouncing up and down in a tight range.
During this period, whenever prices climbed above 24.0 sellers overwhelmed the instrument and caused it to retrace back below 23.0. And when prices dipped to 22.50 buyers stepped in to check the decline.
These buying and selling activities caused the rate to hug the 23.0 level tightly (see below).
What next? In the absence of any significant macro catalyst the rate is likely to stay beneath 24.0 for the time being, with occasional rallies towards this ceiling.
Is it a good time to buy GBP?
The Rand has not dropped below 22.4 for the past 22 months. This means that there are plenty of GBP buyers at around these price zones.
If you need GBP in the near term, watch to exchange some Sterling at around 23.0 (and below). I suspect this is the best rate one can get these days.
The exchange rate did drop below 23.0 twice this year. So if the current chart pattern continues, prices should dip into this area again over the medium term, thus providing GBP buyers with favourable exchange rates than 23.3.
Similarly, I would not buy GBP when prices rise above 23.6 since prices may revert back into range.
Will GBP get stronger?
Pound Sterling had a strong recovery during 2023 when the last Conservative government enacted measures to calm the market.
Against ZAR, the rate rose during that period from 20 to 24.50 (GBP stronger since it requires more ZAR per Sterling). But following a multi-year sideways consolidation, is the rate ready for the next leg up?
This is hard to say. The rate did not move much after the General Election last year. The recent rate cut by the Bank of England also failed to change the technical picture drastically.
In other words, GBPZAR’s chart action tells us the market has priced in a lot of the current and near-term economic factors from both countries.
That said, the long-term picture is unfavourable to ZAR. In 2019, 17.0 Rand buys one Sterling. Now it requires more than 23.0.
IMF estimates that South African’s real GDP growth this year will reach 1.5 percent. This may be veering on the low side for an emerging economy. That’s why GBPZAR’s trend remains under pressure.
For the moment, the sideways trend may prolong since most economic factors are baked into the pattern.
What is the GBPZAR forecast in weeks?
Most of the GBPZAR forecasts are seemingly favourable to the Rand.
In the next few quarters, the rate is expected to drop into the low 22 and no prediction is expecting the rate to bounce to 24.0 (see below).
In some ways, this is consistent with the technical picture shown above; sideways ranging pattern with tests of support on the horizon.
For now, no breakout is anticipated on either side of the 22.4-24.0 range – unless some unexpected macro catalysts emerge to cause massive GBP or ZAR buying.
Jackson is a core part of the editorial team at GoodMoneyGuide.com.
With over 15 years industry experience as a financial analyst, he brings a wealth of knowledge and expertise to our content and readers.
Previously Jackson was the director of Stockcube Research as Head of Investors Intelligence. This pivotal role involved providing market timing advice and research to some of the world’s largest institutions and hedge funds.
Jackson brings a huge amount of expertise in areas as diverse as global macroeconomic investment strategy, statistical backtesting, asset allocation, and cross-asset research.
Jackson has a PhD in Finance from Durham University and has authored nearly 200 articles for GoodMoneyGuide.com.
You can contact Jackson at jackson@goodmoneyguide.com
