- The British Pound initially popped above the 1.14 level, an area that I have been watching for some time during the day on Wednesday, but we've given that back only to turn around and bounce a bit from there.
- So, with this being said, I think you have to look at it through the prism of whether or not we can continue to find buyers.
- I think at this point, markets are likely to continue to see upward trajectory, mainly due to the Swiss franc and the fact that the Swiss National Bank has recently cut interest rates by 50 basis points while the Bank of England is a little bit tamer when it comes to this.
The Highs on Wednesday Will Matter
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With that being said, I do like buying dips and I do think that if we can break above the highs of the day on Wednesday, it's very likely that we go higher, perhaps reaching towards 1.15. And if you believe the measured move, it actually suggests that we could go three handles, in other words, 1.17, which was the high back in summer of 2024. This is a major swing high that a lot of people will be watching quite closely. Ultimately, this is a massive barrier that will be difficult to overcome.
I certainly don't want to short this market, and I do recognize the fact that the swap rate is extraordinarily high and should continue to be that way. Short-term dips should offer support all the way down to at least 1.13 and therefore I think you've got a scenario where buyers are looking for value and they will find it sooner or later. Once they do, they will jump in and support this market, as we have seen more than once. Furthermore, it is worth noting there is a significant swap in this market going forward at the end of each day.
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