The pound has rallied quite nicely against the Swiss franc during trading on Thursday, bouncing from the crucial 50-day EMA.
This looks a lot like a continuation of the overall carry trade. We're starting to see the carry trade pick up in places like the yen-denominated pairs as well.
So, the ability to get paid at the end of every day is probably a major driver here.
Ultimately, the GBP/CHF market has been very noisy, but I think a lot of that reaction on Wednesday was probably overblown as traders may have run to the safety of the Swiss franc with concerns about the United States buying back more bonds than originally thought; maybe some type of financial issue was out there just waiting to plague markets.
Carry Trade Resumes Above the 50-Day EMA
Since then, we've seen the 50-day EMA tested, and we've gotten back about 40% of the losses. Granted, it's not turning the whole thing around, but it is a nice strong reaction in the very next trading session, which is basically what you need to see. This is a good start to say the least.
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We're in an uptrend. I like this pair. It does pay at the end of every day to go long, and it is probably worth noting that where we had fallen from was also the 1.10 level, a very psychologically important figure. So, there may have been a little bit of profit-taking heading into it to begin with.
Regardless, I am bullish on this pair. I remain bullish on this pair in the environment, and I remain bullish on the carry trade as things stand right now.
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