GBPCHF tests resistance at 1.5250 but fails to breach key level

Over the last couple of weeks GBPCHF has been pulled from pillar to post off of the back of a variety of data release from both the UK and Switzerland.  

The big movers and shakers over the last few weeks have been Mark Carney, hinting at a potential UK interest rate rise earlier than previously expected. This had quite a dramatic impact on the value of GBP and we witnessed the pound gain strength as a result of this across all majors.

On the 19th June the Swiss National Bank left the target interest rate on hold at 0–0.25 percent and maintained its minimum exchange rate against the Euro unchanged at CHF 1.20 per euro. The reasons for this have been rumoured to be because of concerns over financial volatility and exchange rate movement

While citing concerns about volatility on the financial and foreign exchange markets, the central bank increased its inflation forecast for 2014. The Swiss National Bank highlighted that they will continue to enforce the minimum exchange rate with the utmost determination, citing that if necessary, it is prepared to purchase foreign currency in unlimited quantities for this purpose, and to take further measures as required.

As the Graph shows, GBPCHF spiked above 1.5250 but failed to make any further gains above this level, 1.5250 provided too heavier level of resistance for a breach. The GBPCHF pairing is now back trading again between its support at 1.5050 and resistance at 1.5250.

CHF buyers should be looking to take advantage of any push towards the top end of this range, and CHF sellers, it may be work getting rid of your CHF sooner rather than later as over the last 3 months GBPCHF had risen from 1.46 to where we are now, 1.5200 at time of writing.  

 

Sam Edmanson