Potential signal:
- I am a buyer of dips at this point, somewhere around the 1.0933 level, with a stop loss at the 1.0820 level, with a target of 1.1120 above.
- The British pound jumped a bit against the Swiss franc on Wednesday but is struggling to hold onto those gains.
GBP/CHF
The British pound rallied a bit during the trading session here on Wednesday but gave back gains to show signs of hesitation.
Ultimately, this is a market that touched the 1.10 level but shied away from it as it has proven to be a barrier again. There's also been Bank of Japan intervention, and that does have a little bit of a knock-on effect around the world for a moment.
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I don't think that's lasting, but it had people worried about the carry trade. Some people may have been bumped out of other positions and therefore collected some of the gains here in the British pound. A pullback from here makes sense, I suppose. We've had a couple of exhaustion candles.
If we fall from here, I'll be looking to buy, especially if we get somewhere closer to the 1.09 level. The 50-day EMA is just about 25 pips below there as well, so that's also a positive sign. Keep in mind that the swap is heavily in favor of the British pound, and the Swiss National Bank wants to keep its interest rates right around 0.
The Carry Trade and the 1.10 Barrier
When you look at the longer-term charts, the 1.10 level is an area that's been important a couple of times previously, although we have sliced through it a couple of times back in 2025.
So, all things being equal, I still think this is the same type of setup. It's the British pound and the carry trade starting to flex its muscles against the Swiss franc, and I like buying these dips.
I don't have any hesitation whatsoever to hold this GBP/CHF pair for the longer term, but you have to be position-sized correctly in an environment where you could get sudden, erratic moves. It's about slow and steady wins the race in this pair.
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