British pound has been positive during trading on Wednesday against the Swiss franc as we have seen more risk appetite come back into the picture.
This of course is a major influence on how this pair behaves, and despite the fact that CPI came in lower than anticipated in the United Kingdom, the reality is that interest rates dropped around the world and the finishing touches on the text of an arranged agreement between Washington and Tehran now has traders thinking more optimistically.
Ultimately though, when you look at the GBP/CHF pair, the interest rate differential is huge, and you get paid to hold it. Furthermore, I would also argue that this is a market that remains very choppy, I think somewhat bound range, and the 1.0630 level will continue to be a bit of a barrier.
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Breaking the Barrier
If we can break above there, then we would ostensibly be breaking above the 200-day EMA given enough time, and I think ultimately that might be the clue that we are going to go much higher. I don't like the idea of shorting this pair, I do not want to pay the swap, but if we do fall, I could see the market testing the 1.05 level. That scenario where I become interested in buying the pound again.
Ultimately, this is a market that will remain noisy, but the Swiss franc is definitely going to be on the losing end as long as risk appetite can remain somewhat reasonable. If we get some type of agreement in the Middle East, that could really send money flying into riskier assets and by extension leaving the Swiss franc. This would be one of my favorite ways to trade that dynamic if we get it.
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