The British pound slipped lower against the Swiss franc following the drop in market sentiment however, as investors hold long-term expectations for higher interest rates in the U.K., the GBP/CHF may continue to push higher over the near-term as the Swiss National Bank pledges to stem the appreciation in the low-yielding currency.
[B]Currency Pair:[/B] GBP/CHF
[B]Chart:[/B] 60 Min Charts
[B]Short-Term Bias:[/B] Flat
[B][U]Analysis[/U][/B]
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The British pound slipped lower against the Swiss franc following the drop in market sentiment however, as investors hold long-term expectations for higher interest rates in the U.K., the GBP/CHF may continue to push higher over the near-term as the Swiss National Bank pledges to stem the appreciation in the low-yielding currency. After reaching a high of 1.8976 in November, the pound-franc slipped to a low of 1.5124 in December as investors curbed demands for high-yielding assets however, after putting a floor on the overnight lending rate, the Bank of England took unprecedented steps to stimulate the ailing economy, and as the Credit Suisse overnight index swaps shows that investors are raising bets for the BoE to raise borrowing costs over the next 12-months, the pound-franc may continue to push higher over the near-term as policymakers employ all of their available tools to shore up the economy. Over the next few hours of trading, the GBP/CHF should push higher to retrace the sharp sell-off from the previous session, and we may see the pair work its way towards 1.7040-50 (50.0% Fib) over the remainder of the week to fill-in the gap from the 120 SMA. A break above this level should lead the pair back towards last week’s high, and we may see the pound-franc make a run for1.7500-10 (61.8% Fib) over the following week. Nevertheless, as the U.K. 1Q GDP report is expected to reinforce a weakening outlook for the region, a disappointing growth figure could weigh on the exchange rate, and may trigger a sell-off in the pair as the economic outlook deteriorates. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.
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