The GBPCHF currency pair has been trading in the range since the end of February with lower and upper limits of 1.21 and 1.241, respectively. Over the last 3 trading sessions, the price managed to test the mark’s strength of 1.241, roll down and update the annual minimum below 1.21. What to expect from GBPCHF in the immediate future?
On May 17, the pound sought support from the UK employment statistics. The unemployment rate fell to 3.7%, which proved to be better than the forecasts of 3.8%. The very next day, by contrast, the publication of inflation data overshadowed the traders’ mood: the accelerated price growth from 7% to 9% doesn’t bode well for the economy of the United Kingdom.
Today's retail sales data unexpectedly came to the rescue. The indicator increased by 1.4% compared to the previous month (although a decrease of 0.2% was expected). British buyers, despite inflation, are still holding the consumption level from a serious decline.
Just before the franc won support from the statements of the head of the National Bank of Switzerland, claiming that inflation, exceeding the level of 2% is a reason for changing monetary policy. The key rate in Switzerland has been at an ultra-low level of -0.75% since 2015, and its increase could become a serious incentive for the growing demand of the franc. Anyway, before June 16, i.e. the meeting of the National Bank of Switzerland, traders won’t have full confidence in the first increase of the key rate in 14 years, and there are still not enough prerequisites for a serious strengthening of the franc.
As long as the GBPCHF flat remains, a trading strategy on the movement from one range boundary to another is reasonable. Currently, quotes have come to the lower border, which is further strengthened by Bollinger's lower band. The first rebound target is the level of the middle Bollinger band 1.222, and, in case of its breakdown, further movement to the upper border of the sideways 1.241.
The following trading strategy can be offered:
Buy GBPCHF in the range of 1.21 – 1.212. Take profit 1 - 1.222. Take profit 2 - 1.24. Stop loss - 1.207.
In addition, traders, instead of a fixed Stop loss, are able to apply a Trailing stop, when the price moves upwards.