Trading Tip – Given a slowdown in overall market volatility, the British Pound has been trading within a fairly wide range against the Swiss Franc through the past several weeks of currency trading. Assuming that market conditions remain as they have, we believe that this represents an ideal opportunity to play the range in the GBPCHF. Medium term momentum suggests that risks remain to the downside for the carry trade-linked pair, and a short at resistance of 2.1762 seems to be the more attractive trade setup. Yet risk-reward may likewise present an attractive long position near support of 2.1294. An almost-exactly empty Swiss economic calendar increases the likelihood that the GBPCHF will remain rangebound, but traders should watch out for a number of key pieces of British economic event risk.
Event Risk UK and Switzerland
UK – The British economic calendar remains busy in the days ahead, with Producer Price Index figures due Monday to start off three consecutive days of top-tier reports. The PPI numbers will likely influence expectations for the future of Bank of England interest rate chances, and any notable surprises would drive significant volatility in the British Pound. A simultaneous Visible Trade Balance support may likewise garner attention, but the true highlights on the UK calendar will come on the next day’s Consumer Price Index data. Given official inflation targets of 2.0 percent, current consensus forecasts of a 2.3 percent CPI result could potentially dampen hopes for further Bank of England interest rate cuts. Wednesday’s Claimant Count Rate and Average Earnings data will likewise play a significant role in determining market expectations for the future of BoE monetary policy—echoed in a same-day Bank of England Quarterly Inflation Report.
Switzerland – The Swiss economic calendar will remain almost exactly empty in the days ahead, with the only notable releases to include ZEW Survey data on the 14th and Adjusted Retail Sales on the 18th. Neither report has been shown to force especially sizeable moves in the CHF. Indeed, we feel that the data releases pose little risk to our range trade outlook. It will be far more significant to watch for surprises in same-week UK economic event risk.
| Data for February 11 – February 18 | Data for February 11 – February 18 | |||
| Date | UK Economic Data | Date | Switzerland Economic Data | |
| Feb 11 | Producer Price Index (JAN) | Feb 14 | ZEW Survey (FEB) | |
| Feb 11 | Visible Trade balance (DEC) | Feb 18 | Adjusted Real Retail Sales (DEC) | |
| Feb 12 | Consumer Price Index (JAN) | |||
| Feb 13 | Claimant Count Rate (JAN) | |||
| Feb 13 | Bank of England Quarterly Inflation Report | |||
| Feb 17 | Rightmove House Prices (FEB) | |||
