The GBP/CHF broke above the 200-Day moving average this week for the first time since November 2007 however, the sharp retracement following suggests that investors are turning bearish against the pair as market participants speculate the Bank of England to take further steps to shore up the economy.
[B]Currency Pair: [/B]GBP/CHF
[B]Chart:[/B] 60 Min Charts
[B]Short-Term Bias:[/B] Flat
[B][U]Analysis[/U][/B]
The GBP/CHF broke above the 200-Day moving average this week for the first time since November 2007 however, the sharp retracement following suggests that investors are turning bearish against the pair as market participants speculate the Bank of England to take further steps to shore up the economy. At the same time, the hourly chart shows that the pound –franc has gapped lower from the previous session, with the RSI showing a strong oversold signal, and the pair may bounce back to fill-in the gap if the BoE maintains its current policy in place at the rate decision later today. After reaching a high of 1.8976 in November, the GBP/CHF plunged to a low of 1.5124 on 12/29 following the rise in risk aversion, and we saw the pair push above the 1.7500-10 (61.8% Fib) for the first time this year but, the lack of momentum to hold above the key level suggests investors are turning bearish against the pair as they weigh the outlook for future policy. Over the next few hours of trading, we may see the British pound continue to fall lower ahead of the BoE interest rate decision as market participants speculate the central bank to expand its asset purchase program by another GBP 25B to GBP150B however, the strong technical implications suggests that a corrective retracement is underway, and we may see the pair attempt to push back above the 120-SMA over the remainder of the session. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.
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