Potential signal:
- I am buying here, with a stop-loss at 1.0925 and a target of 1.1209 above.
- The British pound continues to see buyers against the lowly Swiss franc, as the carry trade lives on. At this point, it’s a one-way move.
The British pound has been noisy against the Swiss franc during trading on Tuesday as we continue to see quite a bit of volatility. This is a pair that's been extraordinarily bullish for some time, so a little bit of back-and-forth consolidation makes a certain amount of sense in this type of environment.
Short-term pullbacks at this point in time still look like buying opportunities to me
Just like a break above the 1.1050 level does, I am more than comfortable holding on to the carry trade and the swap that I get at the end of every day in an environment that, quite frankly, has been strong for a while.
The Swiss National Bank continues to hang around the zero interest rate policy that they've had for a while, and with that, it makes a certain amount of sense that the British pound takes advantage of that.
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While the Bank of England has seen a little bit weaker economic data as of late, even earlier in the session with the claimant count change number coming in much higher than anticipated, the reality is that the interest rate differential is miles apart and will continue to be something that could drive this pair higher regardless.
With that being said, I remain fairly bullish on this pair, but I recognize that there will be times where we get the occasional pullback. That pullback, to me, is an opportunity to pick up cheap British pounds, and I believe as long as we can stay above the 50-day EMA, currently at the 1.0907 level, this is a market that technically looks somewhat bullish.
Ultimately, I think this is a market that could have much further to go based on the recent action.
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