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Stock Market Trend Forecast Oct - Dec 2019 by Nadeem Walayat

British Pound Still Rallying Against Swiss Franc

Currencies / British Pound Jul 21, 2015 - 05:47 AM GMT

By: Richard_Cox

Currencies

Forex markets have posted some significant trends so far in 2015.  But when we look at the overall value of the British Pound (GBP), the comparisons are generally made against either the Euro or the US Dollar.  There is a strong basis for this fact, as both of these currencies see much larger trading volumes than some of the other selections that are available in the currency markets. 


There is also the added influence that is generated by the Federal Reserve in raising interest rates and by the European monetary union in its suggestion that one or more of its member states could be forced to leave the union.  But when we look at the recent activity against the Swiss Franc (CHF), some very interesting trends have started to develop which suggest continued upside in the Pound.  Many of these trends have been propelled by central bank factors and the viability of these trends is confirmed by many practicing both technical and fundamental analysis. 

Broad weakness in the CHF sharply increased after the Swiss National Bank (SNB) removed its price peg relative to the Euro (at 1.20).  This action made the CHF one of the most volatile assets in the currency market this year.  Since then, the Pound has made steady gains and the GBP/CHF is now trading above the 1.50 level. 
A clear break at this stage would target levels that have not been seen since the SNB changed its policy on the CHF.  Recent market reports from MediaGroup Switzerland show that statements from the SNB have done little to highlight the need for higher currency values and this ultimately points toward a continuation of the dominant trend higher in the GBP/CHF.

Whether or not the same types of trends will continue in other sections of the market remains up for debate.  Against the Euro, we are likely to see continued strength as there are still some clear problems in the fragmentation of the region’s monetary union.  In the US, most of the trend factors will be determined by the rate at which the Federal Reserve changes interest rates.  But if you are looking to take active positions in the GBP, the likely road is much more clear as there is little reason for the SNB to move again in currency policy any time this year.  As long as this remains the case, we should be seeing much higher highs in the GBP/CHF. 

By Richard Cox

© 2015 Richard Cox - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


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