Fundamentally, any sign of stabilization within global equities should help to rally the cross. Additionally, data out of the UK has been consistently better than expected, including today’s stronger consumer confidence and PMI releases, while concerns over the state of the Swiss economy have begun to offset the lure of the Swissy safe haven status.
This morning’s event risk in the form of the BoE and ECB rate decisions will no doubt impact the price. Given the better than expected data releases out from the UK over the past weeks, we will look for some sign from the BoE that we could indeed be finally close to a bottom.
Gbp/Chf – The cross is in the process of bouncing off of a major confluence of technical support in the form of a rising trend-line, 50-Day SMA, and 61.8% fib retracement. A fresh higher low is now sought out by 1.6375 (2Mar low) to be confirmed on a break back above 1.7490 (10Feb high). Wednesday’s bullish reversal day confirms outlook and as per our recommendation from Wednesday afternoon, we bought the cross by 1.6600 for a move back towards 1.7490 over the coming days/weeks. Only back below 1.6375 negates and give reason for pause. Position: LONG @1.6600 FOR A 1.7490 OBJECTIVE, STOP @1.6290. Stops to be trailed to cost on a break above 1.6775.
Written by Joel Kruger, Technical Currency Analyst for DailyFX.com
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