Today, all eyes are firmly fixed on BoE and SNB rate decisions, which are poised to offer directional cues for the GBP/CHF, hopefully. The pair has been bounded in a constrained range for some time, hungry for a catalyst to redefine its movement.
On one hand, BoE is grappling with the aftermath of lackluster UK inflation data, leaving its imminent rate decision hanging in a delicate balance. The central bank faces two potential paths: embracing a hawkish hold akin to Fed, hence deferring a rate hike while keeping it in the future playbook, or mirroring ECB’s strategy with a dovish hike, signaling a peak in the tightening cycle. This undetermined stance has metamorphosed the rate decision into somewhat of a coin toss.
Meanwhile, the consensus among analysts is leaning towards a 25bps hike by SNB, setting the interest rate at a neat 2.00%, thereby drawing the current cycle to a close. This perspective, held by a substantial majority of economists surveyed by Bloomberg, finds reinforcement in the upward revision of the 2024 inflation forecasts tabled by SECO yesterday.
Casting an eye on GBP/CHF, it is currently oscillating within a short-term range between 1.1053 and 1.1240. Presently, its trajectory is hard to pin down. The bearish sentiment is palpable with the pair capped below by 55 D EMA at 1.1709. However, this is offset by the steadfast support at 38.2% retracement of 1.0183 to 1.1574 at 1.1043.
For a clear bearish momentum to materialize, the cross would need to break the 1.1053 support, and then ensuring it sustainably trades below 1.1043 – a weekly close below this fibonacci level would solidify this stance. Yet, a spike lower, followed a substantial rebound could indicate a bullish reversal, hinting at a potential rise past 1.1240 resistance later, to extend the medium term range trading from 1.1574.