Pound to rand (GBP/ZAR) breaks and retests ahead of BoE decision

on Mar 22, 2023
  • The GBP/ZAR pair pulled back after the latest UK and South African inflation data.
  • It has formed a break and retest pattern, which is a sign of continuation.
  • The Bank of England will deliver its interest rate decision on Thursday.

Follow Invezz on Telegram, Twitter, and Google News for instant updates >

The pound to rand (GBP/ZAR) exchange rate drifted downwards after the UK and South African inflation data caught the market by surprise. The pair dropped to a low of 22.50, which was much lower than this month’s high of 22.80.

BoE interest rate decision

The GBP/ZAR price dropped slightly after the latest UK and South African inflation data. In the UK, as I wrote here, the headline consumer price index (CPI) rose 1.1% on a month-on-month basis. On a year-on-year basis, inflation jumped from 10.1% to 10.4%, bucking the recent trend.

The most closely-watched core inflation rose from -0.9% to 1.2%, higher than the median estimate of 0.8%. It rose to 6.2%, signaling that the Bank of England (BoE) has more work to do considering that the unemployment rate remains tight.

These numbers are important for the pound to South African rand because they came a day before the Bank of England (BoE) delivers its interest rate decision. Economists expect the data to show that the bank will hike interest rates by 0.25%. Because of the strong inflation data, there is a likelihood that it will hike by 0.50%. 

The GBP/ZAR pair also pulled back after the latest South African inflation data. According to the statistics agency, the headline CPI jumped from -0.1% to 0.7%, higher than the median estimate of 0.8%. On a YoY basis, inflation rose from 6.9% to 7.0%, higher than the SARB target of between 3% and 6%.

Core inflation rose from 0.2% to 0.8%, higher than the median estimate of 0.6%. It rose from 4.9% to 5.2%. Therefore, these numbers mean that the South Africa Reserve Bank (SARB) will likely hike by 0.50% next week.

GBP/ZAR technical analysis


GBP/ZAR chart by TradingView

The GBP/ZAR exchange rate drifted downwards after the South African and UK inflation numbers. This decline was notable since it seems to be part of a break and retest pattern. The retest part of this breakout is 22.32. In most periods, this pattern is usually a bullish sign. 

The pair remains above the 50-period moving average while the RSI has continued dropping. Therefore, the pair will likely retest the key point at 22.32 and then resume the bullish trend.


Looking to capitalise on rising & falling USD, GBP, EUR rates? Trade forex in minutes with our top-rated broker, eToro.


77% of retail CFD accounts lose money.