Will British Pound Rally Continue Against the Swiss Franc?
Currencies / British Pound Dec 06, 2013 - 06:47 AM GMTAdam Lemon writes: The GBP/CHF pair had a very back and forth session during the trading hours on Wednesday, but the most important thing is the fact that there is an uptrend line dissecting through the 1.4750 handle, and that area of course has been one of the least passing interest. Because of that, it makes perfect sense it bounced from there, and now have a somewhat neutral looking candle. However, all things being equal, it looks like the British pound is set to continue its strength against the Swiss franc. Lately, the British pound has been one of the strongest currencies to follow.
The great thing about this pair is that it has a reasonable spread, and it tends to follow global risk appetite. Traditionally, the Swiss franc has been a safe haven of sorts, as money flows into Switzerland when there is a certain amount of fear or uncertainty. It wasn't until recently that the Swiss franc was taken off of the gold standard, so that's probably part of the reason. On top of that, there is of course the whole safety of Switzerland itself, and the Swiss banking sector. On the other hand, the UK is a little bit more of a riskier place. These are relative terms of course, but this is how the pair typically moves.
The British pound reigns supreme.
The British pound has been one of the strongest currencies but it has had to take a little bit of a break recently. Nonetheless, there might be a little bit of a tight range going higher along the trend line in the near-term. Doesn't matter though, ultimately the uptrend is still intact, and should continue to see buying every time this pair falls a bit.
Even if we do see the trend line gets broken to the downside, there are plenty of supportive areas below in order to pick this market up. Because of this, trader should be very bullish of this pair, and will continue to be for the foreseeable future.
By Adam Lemon, Senior Analyst, DailyForex.com and Chief Instructor at www.fxacademy.com.
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About Adam Lemon
Adam is the Chief Instructor at www.fxacademy.com and trades Forex on his own account. He has worked in financial markets for over 12 years, including 6 years with Merrill Lynch. He is certified in Fund Management and Investment Management by the U.K. Chartered Institute for Securities & Investment.
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