Among the major currencies, one of the potential winners in 2018 could be the British pound. There is a good possibility sterling will bounce back strongly as UK wages recover, putting further upward pressure on inflation which is already well above the Bank of England’s target. As more Europeans probably move back to their home nations due to Brexit, net immigration could fall, reducing the supply of work force, thereby pushing up wages. Meanwhile the Swiss franc could lose out as Switzerland’s battle with deflation and a high exchange rate continues. Consequently, the Swiss National Bank would be keen to keep its monetary policy extraordinary loose at a time when other major central banks, including the Bank of England, tighten their belts. One caveat in this bullish outlook is if the Swiss franc finds demand from safe haven flows, say as a result of a stock market correction. Even so, this could prove be a temporary boost.
As we approach the end of this year, the GBP/CHF is threatening to break above its long-term, 10-year-old, bearish trend line which has been place since before the financial crisis. It has already managed to climb back above the 2015 low, formed when the SNB dropped the 1.20 EUR/CHF peg. The rebound has helped to lift the pair above the psychologically-important and key resistance at 1.30. If the GBP/CHF manages to break higher as we expect it to, then the next immediate upside targets would be at 1.3420 and 1.4000, levels which were formerly support. In the longer-term, we think the GBP/CHF will be able to climb above the pivotal 1.5500 area, but we will cross that bridge when we get to it. As things stand, we would turn cautious in our long-term bullish outlook in the event price breaks back below 1.30 on a monthly closing basis.
Trading leveraged products such as FX, CFDs and Spread Bets carry a high level of risk which means you could lose your capital and is therefore not suitable for all investors. All of this website’s contents and information provided by Fawad Razaqzada elsewhere, such as on telegram and other social channels, including news, opinions, market analyses, trade ideas, trade signals or other information are solely provided as general market commentary and do not constitute a recommendation or investment advice. Please ensure you fully understand the risks involved by reading our disclaimer, terms and policies.
Recommended Content
Editors’ Picks
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD remains depressed below 1.0800, as traders lack directional impetus amid minimal volatility and thin liquidity on Good Friday. The pair keenly awaits the US PCE inflation data and Fed Chair Powell's speech for fresh hints on next week's price action.
GBP/USD holds steady above 1.2600 as markets stay calm on Good Friday
GBP/USD trades sideways above 1.2600 amid a typical Good Friday trading lull. A broadly firmer US Dollar could keep any upside attempts limited in the pair ahead of the US PCE inflation data and Fed Chair Powell's appearance.
Gold ends Q1 2024 at record highs, what’s next?
Gold is sitting at an all-time high of $2,236, lacking a trading impetus amid holiday-thinned conditions on Good Friday. Most major world markets, including the United States are closed in observance of Holy Friday, leaving volatility around Gold price highly subdued.
Ripple's move above this key level could trigger nearly 50% rally for XRP
Ripple price has overcome a critical resistance level and flipped into a support floor on the weekly time frame. This development happened while XRP tightly consolidated for roughly 250 days.
US core PCE inflation set to ease in February on month as Federal Reserve rate cut bets for June mount
The core Personal Consumption Expenditures Price Index is set to rise 0.3% MoM and 2.8% YoY in February. The revised Summary of Projections showed that policymakers upwardly revised end-2024 core PCE forecast to 2.6% from 2.4%.