- The British Pound has rallied it rather significantly during the trading session against the Swiss franc on Wednesday, as we are now breaking above the shooting star from a couple of days ago.
- Now that the market is breaking free of the consolidation range between 1.11 and 1.14, one would assume that there should be a little bit of a knock-on effect and a little bit of FOMO coming into the market with a measured move of 300 pips.
- That means 1.17. Whether or not we actually get there remains to be seen, but it certainly looks like the interest rate difference will continue to favor the British pound against the Swiss franc as the Swiss National Bank recently cut rates by 50 basis points. So obviously that is a big deal.
On Short Term Pullbacks
Short-term pullbacks, I think, continue to get bought into as the market participants almost certainly will be looking to collect that swap at the end of the session. And furthermore, it’s probably worth noting that it’s a little bit more risk on in the European area in general. So that works against the Swiss franc also. As long as we can stay above the 1.13 level, then I think we are in a pretty good place. At the moment, this is a market that I think a lot of traders are trying to get involved in, collecting that swap.
We have broken above previous resistance, and now the next resistance area looks to be the 1.15 level, followed by the 1.1629 level, and then of course that potential target of 1.17. I have no interest in shorting this pair, but if we did break down below the 1.13 level, then we have to reassess everything. But as things stand right now, that looks very unlikely.
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