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Sterling is on the move as Brexit uncertainty rises on the session. Does the spike lower on GBP/CHF have legs or is there a pullback ahead?

Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on a potential reversal setting up in EUR/GBP, so be sure to check that out to see if there is still a potential play!

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Fresh Market Headlines & Economic Data:

Dow falls more than 200 points after strong start to December

U.S. private payrolls miss expectations in November; 307K vs. 410K forecast

Barnier Tells EU Envoys Three Main Brexit Issues Unresolved

UK becomes first country to approve Pfizer’s Covid-19 vaccine, first shots roll out next week

Record decline in Canadian labor productivity following record increase the previous quarter

ECB’s Kazaks backs longer bond-buying stimulus boost

German Retail turnover in October 2020: 2.6% m/m in real terms

German Wholesale turnover in September 2020 down by 0.3% m/m

Oil prices slip as market awaits output deal

Upcoming Potential Catalysts on the Economic Calendar

Fed Williams speech at 6:00 pm GMT
Fed Beige Book at 7:00 pm GMT
Australia Construction index at 9:30 pm GMT
New Zealand Building Consents at 9:45 pm GMT
Australia Services PMI at 10:00 pm GMT
Australia Trade Balance, Home loans at 12:30 am GMT (Dec. 3)
Japan Services PMI at 12:30 am GMT (Dec. 3)
China Services PMI at 1:45 am GMT (Dec. 3)

What to Watch: GBP/CHF

GBP/CHF 1-Hour Forex Chart
GBP/CHF 1-Hour Forex Chart

On the one hour chart above of GBP/CHF we can see the steady move lower over the past week turned into a big Sterling dump on the session as comments from European Union chief Brexit negotiator Michel Barnier suggest a Brexit deal may not come by the end of the year.

The pair dropped far more than its average daily true range of around 100 pips before finding support just above the 1.1900 psychological level. It looks like the bulls are recovering a bit from today’s move but will the bears take advantage of that?

With so much uncertainty around Brexit and the odds rising higher of a no-deal scenario, staying short GBP makes sense at the moment. But after a big move like that, it’s prudent to wait for the bounce before considering a short play.

We’re looking out for GBP/CHF to retest the broken previous support area / major psychological area around 1.2000, and watching to see if bearish reversal candles form. If so, a new short position makes sense, especially if stochastic signals overbought conditions, which could draw in technical / momentum traders.