The British Pound continues to see upward pressure overall, as the interest rate in the UK is conducive to gains at the moment. Compound that with a 0% Swiss franc, and you have a strong carry trade position.
British Pound / Swiss Franc (GBP/CHF)
The British pound has rallied a bit during the early part of the trading session here on Friday as we reach toward the 1.0950 level again. Remember, this is a great carry trade pair and is actually more carry than the U.S. dollar against the Swiss franc, which I am also long of.
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We have recently seen the carry trade get hammered as the intervention in the yen recently, and then compiled and combined with the Treasury Department in the United States entering a larger buyback period has people worried about that. People were running to the Swiss franc in that particular session on Wednesday, I suspect, fearing that there was some type of major financial disaster waiting.
That being said, we've already eaten half of this candlestick in this pair, and if you held on or got long at the 50-day EMA, you've made some swap along the way, so quite frankly, there's some good vibes here, as it were.
Carry Trade Dynamics and Key Support Levels
We bounced from the 1.0840 level, where the 50-day EMA is and where previous support had been. I do like this pair longer term. This is one of those pairs that I would like to do something long term with; just simply collecting the swap and being patient might be the play here.
Yes, maybe rates get cut in the United Kingdom eventually, but we're light years from anything meaningful when it comes in comparison to the Swiss franc, so steady as she goes in this GBP/CHF pair for me, as I love the swap at the end of each session.
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