APAC Corner: GBP Jumps While ZAR Crashes

A subdued Asia session with most G10 currencies range trading, content to let Asia stock markets take most of the heat after a soft Wall Street close last night. The exceptions being GBP/USD and USD/ZAR.


Spiked this morning from its lows this morning at 1.2100 to 1.2325 before falling to 1.2240 before settling higher at 1.2310 into early Europe. Just another day in Sterling at the moment. The catalyst was a report that the British Prime Minister, Theresa May, had in effect “blinked” and would allow Parliament to debate and vote on her Brexit plan. (whatever that may be)

A few key points to note here are

  1. She expects Parliament to not attempt to block Brexit.
  2. That Parliament doesn’t undermine the aforementioned initial negotiating position.

My initial reaction to this is the it will be the EU that sets out the initial negotiating position and not the UK. I also suspect that negotiating position will not leave much room on the UK’s part for negotiation! Nevertheless the street took this as bullish as it felt Parliament may somehow soften the UK’s Brexit stance from a hard to a soft one.

The price action probably has more to do  with illiquidity and the extreme short positioning out there more then anything else. It  highlights just how headline driven trading the GBP will be in the months to come.

The daily chart still has the RSI at extremely oversold levels. Although the MACD has yet to turn up. Technically tranline resistance doesnt come in until the 1.2850 area. (See chart below) This leaves a lot of room for GBPUSD to squeeze higher and still be in a downtrend.

Short term  there is clear support now at 1.2100 with resistance at the days highs at 1.2325.




More trevails overnight with the South African Finance Minister being charged with  theft and fraud, relating to his time as Head of the Revenue Service. (the unfortunately named SARS)

Even before this had come out the previous weeks trading had seen USD/ZAR track steadily higher on a stronger USD and expectations of higher US rates. As the announcement hit the wires USD/ZAR leapt from 13.8500 to 14.4350 before settling around  14.30000 on profit taking in early Europe.

Johannesburg have wasted no time on their arrival though and have continued to buy USD/ZAR. The perception in South Africa is that this indictment of a highly respected Finance Minister is political in its nature. There is an even greater fear that this will be the final straw for the ratings agencies who will down grade South Africa’s debt to “junk” status.

Certainly the market has voted with its feet. The Rand breaking through the Ichimoko Cloud at 14.3800 with  ease. (this held exactly at 14.4350 yesterday) We have resistance at 14.4835 today in the shape of the  200-day moving average and then 14.59000 previous daily high.

Support comes in at 14.2700 the daily low and then 14.1550 the bottom of the Ichimoko Cloud.


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is OANDA’s senior market analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV, Channel News Asia as well as in leading print publications including the New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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