The Swiss franc tumbled lower this week on speculation that the Swiss National Bank increased its purchases of foreign currencies in an effort to stem the downside risks for the economy, and the GBP/CHF is likely to push higher over the near-term as investors hold long-term expectations for higher interest rates in the U.K.
[B]Currency Pair: [/B]GBP/CHF
[B]Chart:[/B] 60 Min Charts
[B]Short-Term Bias:[/B] Bullish
[B][U]Analysis[/U][/B]
The Swiss franc tumbled lower this week on speculation that the Swiss National Bank increased its purchases of foreign currencies in an effort to stem the downside risks for the economy, and the GBP/CHF is likely to push higher over the near-term as investors hold long-term expectations for higher interest rates in the U.K. After reaching a high of 1.8976 in November, the pound-franc slipped to a low of 1.5124 on 12/29 following the drop in risk appetite, and the turnaround in market sentiment may continue to lead the pair higher over the near-term as market participants move into higher risk/reward investments. However, the GBP/CHF failed to break above 1.8150-60 (78.6% Fib) this week following the sell-off in the Swiss franc, and we may see a corrective retracement follow over the remainder of the week as the RSI continues to hold in overbought territory. Over the next few hours of trading, we may see the pound-franc fall back below the 1.8000, and work its way towards 1.7800 to fill-in the gap from the 120 SMA, and a break below this level could lead the pair to test1.7500-10 (61.8% Fib) for short-term support. At the same time, the rally in global equities is likely to drive the pair higher as investors raise their appetite for risk, and we may see the pair push above the fresh trend high to make another attempt at the 78.6% Fib over the remainder of the week. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.
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