Source: PaxForex Premium Analytics Portal, Fundamental Insight
The Swiss National Bank Sight Deposit Interest Rate is predicted at 1.50%. Forex traders can compare this to the previous Swiss National Bank Sight Deposit Interest Rate, reported at 1.00%. It will mark the fourth consecutive interest rate increase since the Swiss central bank surprised markets with its first hike in June 2022. Since last weekend’s shotgun wedding and forced takeover of Credit Suisse by UBS, creating on Swiss financial behemoth with 5+ trillion in assets, the financial stability of Switzerland has become under scrutiny. Some market participants have labeled the wealthy Alpine nation a financial banana republic. The fallout of the Credit Suisse collapse throughout the global financial system remains unknown, as it had an investment portfolio exceeding 500 billion.
The Bank of England is predicted to hike interest rates by 25 basis points to 4.25%. Forex traders can compare this to the previous Bank of England meeting, where the UK central bank increased interest rates by 50 basis points from 3.50% to 4.00%. It would represent the eleventh consecutive tightening of monetary policy. The British central bank received an unexpected increase in inflation yesterday after three months of contraction. It could serve as an indicator of what other economies may face. Six of the nine-member MPC are expected to vote for a hike, with three votes for no change. The rift between hawks and doves is widening, suggesting that the end of interest rate increases is near.
Given the uncertain economic and financial conditions, with credit tightening, as noted by US Fed Chairman Powell after the US central bank increased interest rates to 5.00% yesterday, the Swiss Franc could outperform the British Pound. Worries about the health of the regional banking system in the US persist, together with economic worries, amid surging consumer credit card debt.
The forecast for the GBP/CHF turned bearish after this currency pair reversed the breakout above its Ichimoku Kinko Hyo Cloud. Confirming the lack of short-term bullishness are the Kijun-sen and the Tenkan-sen, which both flatlined. Adding to downside pressures is the descending Ichimoku Kinko Hyo Cloud, suggesting more volatility ahead. Traders should also monitor the CCI after it recorded a lower high in extreme overbought territory, followed by a breakdown. A move below zero can accelerate selling pressure. Will bears maintain control over price action and force the GBP/CHF into its horizontal support area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the GBP/CHF remain inside the or breakdown below the 1.1250 to 1.1310 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 1.1280
- Take Profit Zone: 1.1070 – 1.1115
- Stop Loss Level: 1.1355
Should price action for the GBP/CHF breakout above 1.1310, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 1.1355
- Take Profit Zone: 1.1400 – 1.1435
- Stop Loss Level: 1.2310
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