Source: PaxForex Premium Analytics Portal, Fundamental Insight
UK Public Sector Net Borrowing for August came in at -£10.760B and UK Public Sector Net Cash Requirements at £2.468B. Economists predicted a reading of -£9.800B and £1.602B. Forex traders can compare this to UK Public Sector Net Borrowing for July, reported at £1.200B, and UK Public Sector Net Cash Requirements at -£7.543B.
The Bank of England is predicted to increase interest rates by 25 basis points from 5.25% to 5.50%, which would mark the 14th consecutive hike in interest rates. The British central bank could announce a pause after the latest inflation data released yesterday showed a sharper slowdown, but inflationary pressures remain. Seven MPC members are expected to vote for a hike, with two voting for a pause. Among G7 economies, the UK had the toughest inflation fight and cost of living crisis and has been the most aggressive central bank next to the US Federal Reserve.
Swiss M3 Money Supply M3 for August came in at CHF 1,132.3B. Forex traders can compare this to Swiss M3 Money Supply M3 for July, reported at CHF 1,135.5B.
The Swiss National Bank Sight Deposit Interest Rate is predicted at 2.00%. Forex traders can compare this to the previous Swiss National Bank Sight Deposit Interest Rate, reported at 1.75%. It would mark the fifth consecutive monetary policy tightening by the Swiss central bank, which trails its G7 counterparts, except Japan, which maintains negative interest rates, in its aggressiveness. The ECB and the US Federal Reserve hinted at the potential peak rates, but the US central bank, after keeping interest rates unchanged at 5.50% yesterday, noted that rates will stay higher for longer. Some Fed watchers believe one more 25 basis point hike is in the cards for 2023, especially with commodity prices rising and wage-based inflation a rising threat amid union-led strikes across US sectors.
The outlook for the GBP/CHF is cautiously bullish after this currency pair stabilized inside its horizontal support area. The Kijun-sen and the Tenkan-sen have flatlined following a bearish crossover, and volatility could rise, but the Ichimoku Kinko Hyo Cloud shows bullish signs. While the Senkou Span B is flat, the Senkou Span A has begun to drift higher. Traders should also monitor the CCI in extreme oversold territory. A breakout above -100 may start the next rally. Can bulls regain control over the GBP/CHF and pressure price action into its horizontal resistance 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 breakout above the 1.1060 to 1.1115 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 1.1085
- Take Profit Zone: 1.1240 – 1.1280
- Stop Loss Level: 1.1035
Should price action for the GBP/CHF breakdown below 1.1060, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 1.1035
- Take Profit Zone: 1.0935 – 1.0985
- Stop Loss Level: 1.1060
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