JOHANNESBURG (Reuters) – The South African rand weakened early on Wednesday as investors took profits after a rally that took the currency to a one-and-a-half month peak.

The rand was 0.5% weaker at 16.4950 per dollar at 0730 GMT, having reached 16.3600 overnight for its best since June 10 in a broad rally spurred by a landmark European Union economic rescue package.

The EU will pump at least 750 billion euros ($865 billion) into a package aimed at helping the hardest-hit economies. Part of that stimulus is expected to spill into emerging market investments.

But with COVID-19 infections continuing to climb locally and abroad, and keenly watched United States initial jobs claims data due on Thursday after South Africa’s central bank decides on lending rates, investors opted to pocket gains from the recent rally.

The South African Reserve Bank (SARB) concludes its three-day policy meeting on Thursday, with lending rates expected to be cut by 25 basis points.

But with inflation dipping below the bank’s target range of 3-6% for the first time in two decades and fellow emerging market banks continuing to ease policy there is growing probability of a deeper cut, analysts say, keeping big bets at bay.

Bonds prices were also softer in early trade. The yield on benchmark 2030 government paper was up 2.5 basis points at 9.33%.

($1 = 0.8671 euros)