GBP/CHF Online Currency Pair Retracement – July 18, 2014

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GBP/CHF Online Currency Pair Retracement - July 18, 2014

GBP/CHF Online Currency Pair Retracement - July 18, 2014

GBP/CHF has been moving higher for more than a month and appears ready to make a test of the online currency pair trend line on the 4-hour forex chart. Price has found resistance at the 1.5400 handle and may need to make a test of the 1.5300 support zone later on.

The 1.5300 handle lines up with the trend line and the 50% Fibonacci retracement level on the latest swing low and high on the 4-hour chart. After this corrective wave to the area is through, another impulse wave past the previous highs at 1.5400 might be in the cards.

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Online Currency Pair Outlook

GBP/CHF has retreated from its pair highs in yesterday’s US trading session as geopolitical risk weighed on on online currency trading. Lower-yielding currencies such as the Swiss franc took advantage of this and gained ground against its higher-yielding counterparts, such as the pound.

However, the bias for this pair is still bullish, as the Bank of England is much closer to hiking interest rates. The minutes of their latest policy meeting indicated that officials are looking to tighten sometime before the end of the year, and this was echoed by BOE Governor Carney who kept reiterating that they will hike rates sooner rather than later.

As for the franc, the SNB is still ready to intervene in the currency market if necessary. This follows the ECB’s decision to ease last month, weighing on EUR/CHF and prompting speculation that the Swiss central bank would step in to defend the peg.

Further weakening of risk appetite could push this pair lower though, perhaps until the next support area near the 1.5250 minor psychological mark. A break below this online currency level could be a sign that the uptrend is over and that a longer-term downtrend might happen next.

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com