So the Bank of England (BOE) isn’t as hawkish as pound bulls thought it would be.
Will the decision affect GBP/CHF’s attempt at a break-and-retest play?
Here’s what I’m looking at today:
What traders didn’t expect was that Andy Haldane – who voted to reduce their asset purchases target by 50 billion GBP – did NOT get any friends over on his side. And he’s leaving this month!
MPC members also weren’t too excited to unwind their stimulus anytime soon, saying that they should “lean strongly against downside risks” so that they don’t undermine the economy’s recovery by premature tightening.
Despite the BOE’s cautiousness, though, the pound remained supported against the franc.GBP/CHF is now consolidating at the 1.2775 zone that lines up with the 61.8% Fib retracement of the last upswing. What’s more, the support lines up with the range resistance that had been solid from April to mid-June!
If you’re bullish on the pound or if you feel like taking risks, then you can look for a break-and-retest play from GBP/CHF’s chart. After all, the BOE is still one of the more hawkish central banks out there and pound traders seem to shrug off recent data disappointments from the U.K.
I’m looking to buy GBP/CHF as soon as I see bullish momentum and candlesticks. June’s highs will be my initial target but I can also scale in if the pound’s strength gains momentum.
I won’t be discounting potential weakness for the pound, though! New weekly lows for GBP/CHF will put the pair back inside the broken 170-pip range and could present opportunities to target the 1.2725 mid-range or the 1.2630 range support levels.
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