- Monday has seen the British pound gain a bit of traction against the Swiss franc, but at the end of the day, we are still very much in a trading range that a lot of people will be paying close attention to.
- After all, the market has recently broken above the crucial 1.14 level, an area that has been important multiple times, and it was the previous top of the overall trading range.
- However, we do seem to be struggling above this area, so I think we are in a bit of a state of flux.
Sitting on Former Resistance
At this point, we are sitting on previous resistance and is now starting acts as support. Ultimately, I think you have a situation where traders will continue to see a lot of volatility, but the interest rate differential between the British pound and the Swiss franc should continue to favor the upside. Furthermore, it’s also worth noting that the latest interest rate decision from the Bank of England had a little bit more hawkish tone than an originally anticipated.
Because of this, traders will continue to look at the major difference between England and Switzerland as far as the outlook is concerned, and therefore I think we continue to see plenty of people walking to the British pound on each and every dip.
The 50 Day EMA sits near the 1.1352 level and is rising rather significantly. Ultimately, this is an indicator that a lot of people pay attention to, and therefore it makes a certain amount of sense that it should act as potential support. Underneath there, we have the 200 Day EMA sitting right around the 1.13 level, which of course is an area that has previously been important as well. In other words, I think we continue to see plenty of “buy on the dip” behavior point forward, and therefore I have no interest whatsoever in trying to short this GBP/CHF pair.
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