The GBP/CHF pushed higher this week and made another attempt to retrace the sell-off from the previous year, but failed to break above 1.7500-10 (61.8% Fib), and the pair is likely to hold a broad range over the near-term as investors weigh the outlook for future policy.
Currency Pair: GBP/CHF
Chart: 60 Min Charts
Short-Term Bias: Flat
Analysis
The GBP/CHF pushed higher this week and made another attempt to retrace the sell-off from the previous year, but failed to break above 1.7500-10 (61.8% Fib), and the pair is likely to hold a broad range over the near-term as investors weigh the outlook for future policy. After reaching a high of 1.8976 in November, the pound-franc plunged to a low of 1.5124 on 12/29 following the rise in risk aversion, and the lack of momentum to push back above the 61.8% Fib could lead the pair lower over the following week. At the same time, long-term expectations for higher interest rates in the U.K. paired with the rise in market sentiment may continue to push the British pound higher however, as S&P downgrades the outlook for Europe’s second largest economy, fears of a deepening downturn could weigh on the exchange rate going forward. Over the next few hours of trading, we are likely to see the GBP/CHF fall further to cover the gap from the 120 SMA, and may work its way towards 1.7040-50 (50.0% Fib) over the remainder of the week to test for support. Nevertheless, as risk trends continue to dictate price action in the currency market, a rise in risk appetite may continue to lead the pair higher as investors move into higher-yielding assets. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.
To contact the author of this article, please email: dsong@fxcm.com
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