The British pound weakened against the Swiss franc for the seventh consecutive day, with the GBP/CHF slipping to a two-month low of 1.7256 this week, and the pair may continue to retrace the advance from the March lows as investors weigh the prospects for a global recovery.
[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 weakened against the Swiss franc for the seventh consecutive day, with the GBP/CHF slipping to a two-month low of 1.7256 this week, and the pair may continue to retrace the advance from the March lows as investors weigh the prospects for a global recovery. After reaching a high of 1.8976 in November, the pound-franc slipped to a low of 1.5124 on 12/29 as investors turned increasingly risk adverse, but the rebound in market sentiment paired with expectations for a global recovery has led the pair higher throughout the first half of year. Nevertheless, as the GBP/CHF fails in its second attempt to push above 1.8140-50 (78.6% Fib), the pair looks to have formed a double-top on the daily chart, and the pair may continue to trend lower in the month ahead and work its way towards 1.7050-60 (50.0% Fib) to test for near-term support. Over the next few hours of trading, we may see the pair continue to push lower following the rise in risk aversion and may fall back towards the weekly low at 1.7256 however, the bullish divergence in the RSI suggests that the sell-off is starting the lose steam, and we may see the pair push higher to cover the gap from the 120-SMA at 1.7430. Moreover, as business investments in the U.K. are expected to fall at a slower pace in the second quarter while home prices are projected to rise for the fourth consecutive month in August, investors may ramp up expectations for an economic recovery in the U.K., and a rise in the interest rate outlook may drive the British pound higher 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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