Who looks at GBP pairs ahead of BoE decision?
If you are, you better take a look at the potential breakout and retest play on the GBP/CHF chart!
Before we go any further, ICYMI, yesterday’s watchlist looked at the recent breakout of the NZD/CAD pair for a breakout and retest opportunity. Be sure to check if it’s still a good game!
And now for the main headlines that rocked the markets in the last trading sessions:
Headlines and recent economic data for the market:
Retail sales in Canada In April 2023: +1.1% m/m (+0.2% m/m expected; -1.5% m/m previously); Core retail sales were +1.3% m/m (+0.2% m/m expected; -0.4% m/m prior)
During his testimony before the House Financial Services Committee, Fed Chairman Powell Be warned that less than trend growth is likely to be needed; It is possible that there will be more price hikes in the future but it is likely that it will be at a more moderate pace and dependent on the data.
New Zealand’s trade surplus It contracted from NZD148.2m to NZD46m in May as imports (+4.4% yoy) outpaced exports (+2.8% yoy)
The Swiss National Bank raised interest rates by 25 basis points, to 1.75%.This is the highest rate since April 2002. President Jordan does not rule out further price hikes.
Price action news
The prospect of higher interest rates in the US has risk-takers worried in today’s Asian trading session.
Fortunately, things turned around just before the start of the European session when the Bank of England (BOE) hawkish outlook and improving risk sentiment boosted the China-linked Australian dollar.
The Australian dollar has seen a V-shaped recovery and is now trading below its daily opening prices against the major currencies.
BoE monetary policy decision at 11:00 am GMT
US Initial Jobless Claims at 12:30pm GMT
Day two of Fed Governor Powell’s testimony at 2:00 PM GMT
US Existing Home Sales at 2:00pm GMT
EIA Crude Oil Inventories at 3:00 pm GMT
Australian Manufacturing and Services PMI at 11:00pm GMT
Japan National CPI at 11:30pm GMT
Use the new Currency heat map To quickly see a visual overview of the forex market price movement! 🔥 🗺️
British pound / Swiss franc for 15 minutes Planned by TV
BREAKOUT ALERT! In case you missed it, the Swiss National Bank (SNB) raised interest rates by 25 basis points, to 1.75%.
SNB President Jordan also hinted that they are open to further interest rate hikes.
The GBP/CHF, which was already trading below trend line support, reached fresh lows during the week.
Now the Bank of England (BOE) is in the spotlight. Many believe that Governor Bailey and his team will need to raise their rates a bit higher than initially planned given how persistent high inflation has been in the UK.
Depending on how optimistic BoE members are, traders could worry that higher interest rates will stifle growth in the UK and push it into recession.
The GBP/CHF could find resistance from the pivot point level (1.1430) today which is aligned with the 200 SMA on the 15-minute chart and the 50% Fibonacci retracement.
A rebound from the 1.1420-1.1430 area could mean another trip to the GBP/CHF weekly lows near 1.1360.
But if traders focus on higher interest rates and the Bank of England does a good job of allaying recession fears, GBP/CHF could return to its bullish run in June.
That is, the GBP/CHF could trade again above the trend line support and head towards the previous inflection points such as 1.1470 or 1.1480.
