The British pound tumbled lower against its currency counterparts this, with the GBP/CHF pulling back from the yearly high ahead of the Swiss National Bank interest rate decision, and the pair may continue to retrace the advance from the beginning of the month as investors weigh the outlook for future policy.
[B]Currency Pair:[/B] GBP/CHF
[B]Chart: [/B]60 Min Charts
[B]Short-Term Bias: [/B]Flat
[B][U]Analysis[/U][/B]
The British pound tumbled lower against its currency counterparts this, with the GBP/CHF pulling back from the yearly high ahead of the Swiss National Bank interest rate decision, and the pair may continue to retrace the advance from the beginning of the month as investors weigh the outlook for future policy. The Swiss National Bank is widely expected to hold the benchmark interest rate at 0.25% later today, and may continue to purchase foreign assets in order to stem the downside risks for growth and inflation budding from the appreciation in the low-yielding currency. At the same time, Bank of England Governor Mervyn King continued to hold a dovish outlook for future policy, stating that “it is too soon to reverse the extraordinary policy stimulus that has been injected into the U.K. economy through monetary policy.” Nevertheless, long-term expectations for higher interest rates in the U.K. paired with the mounting risks for deflation in Switzerland may continue to push the GBP/CHF higher over the near-term, and we may see pair attempt to retrace the sell-off from the previous year over the remainder of the month. Over the next few hours of trading, we may see the pound-franc push higher as market participants speculate the SNB to expand its purchases of foreign currencies, and we may see the pair trend towards the 120-SMA at 1.7767to retrace the decline from the previous session. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.
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