The GBP/CHF initially fell during the day on Tuesday but found enough support below to turn things back around. This is one of my favorite pairs to trade, because quite frankly it tends to trend for long periods of time. With that, you can see that we have been going higher for quite some time now, and now we approach the vital 1.55 level. The reason I say this is vital is that we are looking at a complete “round-trip” from the meltdown after the Swiss National Bank announced that it was abandoning the currency peg back at the beginning of the year.
When you look around the Forex markets, you can see that the Swiss franc continues to struggle against most currencies, and it has been recently revealed that the Swiss National Bank is working against the value of the Franc again. Granted, most of that work is probably in the EUR/CHF pair, but it does have a knock on effect in this pair. On top of that, the Swiss have intervened directly against the British pound before, so we can’t even rule that out at this point.
Much higher
I believe that this pair goes much higher for a lot of different reasons, not the least of which is that the British pound is relatively strong in general. I see that the British pound is rising against most other currencies right now, and is even holding its own against the US dollar. Because of this, you have to think that it is going to continue to strengthen against most currencies, especially one that is currently being worked against by its own central bank. Ultimately, this is a market that should give you good gains longer-term, as long as you can handle the short-term pullbacks from time to time. Once we break out above the 1.55 handle, I feel that this market is probably free to go much higher than that. I have no scenario in which I am selling this pair right now.
