GBP/CHF is bouncing off an area of interest and is setting its sights higher again.
Before we look at the setup, you should first see the list of market-moving headlines during the Asian session:
- U.S. EIA crude oil inventories down by 7.4 million barrels vs. projected reduction of 3.4 million barrels
- ISM non-manufacturing PMI up from 57.1 to 58.1
- President Trump to take action on unemployment benefits and eviction relief this week?
- Dr. Fauci suggests vaccine to be ready by year-end or Q1 2021
- New Zealand inflation expectations up from 1.24% to 1.43%
- Japanese PM Abe: COVID-19 treatment options are expanding
Upcoming Potential Catalysts on the Economic Calendar:
- German factory orders at 6:00 am GMT
- BOE monetary policy decision and MPC minutes at 6:00 am GMT
What to Watch: GBP/CHF
A bit of risk appetite seems to be returning to the markets as the spotlight returned to vaccine developments and government stimulus.In addition, the pound could get a boost from the upcoming BOE decision, as policymakers are expected to keep rates and asset purchases unchanged. Officials might also highlight the positive developments in the U.K. economy, as well as the slowdown in coronavirus cases.
If that’s the case, GBP/CHF could see more upside throughout the session, finding support at the mid-channel area of interest and aiming for the swing high next.
The 100 SMA is above the 200 SMA to confirm that support levels are more likely to hold than to break, so there’s a good chance that the uptrend could carry on. At the same time, Stochastic is pulling out of the oversold region to reflect a return in bullish momentum.