GBP/CHF Forex Signal: Eyes Breakout as Market Turns Risk-On

Potential Signal:

• I am a buyer above 1.0850 with a stop at 1.07, aiming for 1.1050 above.
• Remember that you get paid at the end of every day in this pair, and I think that makes patience an easier concept here.

The British pound initially dropped against the Swiss franc during trading on Monday, perhaps a little bit of a risk-off move as the Department of Justice is now looking at Jerome Powell, and that, of course, rattled markets. That being said, I think given enough time, the markets are looking past it. In fact, we are already starting to see the indices in America turn to the upside.

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The British pound over the Swiss franc is a risk-on type of situation, and if we can break out to the upside, the next thing we will be looking at is the 200-day EMA. The 200-day EMA, of course, at 1.0809, is an area that I think you have to watch very closely because if we can break that, we could really take off.

Remember that you get paid at the end of every day with the positive interest rate differential, and therefore, it is worth watching this market for dips as it could give you an opportunity to pick up a little bit of value.

Central Bank Policy

Ultimately, I think this is a market that will continue to see plenty of support, not only from the technical barriers but also from the fact that the Swiss National Bank members have come out and explicitly said they are watching the forex markets.

The British pound is backed by the Bank of England, which, although it just cut 25 basis points, is still hesitant to cut rapidly, while the Swiss National Bank is basically at zero. They won't go negative yet, but they are, of course, known to do that in the past, and that could be part of what is going on here.

All things being equal, I like shorting the Swiss franc, meaning buying this pair and other Swiss franc-denominated ones. If we can clear that 200-day EMA, I think we are looking at 1.11 or so.

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