GBP/CHF Buyers Aim to Confirm Trend Reversal Ahead of UK Bond Auction
Market Overview
Global markets remain focused on trade policy developments, with investors assessing the potential impact of tariffs on major economies. The prospect of bilateral agreements with the United States has improved risk sentiment, leading to a retreat in safe-haven assets such as the Swiss franc and gold.
The British pound has strengthened against the Swiss franc, supported by expectations that the UK, as one of the United States’ key trading partners in Europe, may benefit from new trade arrangements. Meanwhile, euro weakness has further bolstered GBP’s relative strength, allowing the GBP/CHF pair to extend its gains.
Technical Analysis
The GBP/CHF pair is attempting a trend reversal on the 1-hour chart, with buyers gaining control after successfully breaking above the previous resistance at 1.13549. This move has confirmed a shift from bearish to bullish momentum, reinforced by the breach of the ascending trendline. Currently, GBP/CHF is testing resistance at 1.13628, which aligns with the 127.2% Fibonacci extension of the latest downward swing. A decisive break above this level would strengthen bullish momentum, paving the way for further gains towards 1.13728 and 1.13839.
Momentum indicators support the bullish case, as the RSI continues to rise, signaling increased buying interest, while the MACD remains in positive territory, reflecting sustained upside momentum.
However, if sellers regain control, a move below the support at 1.13549 could invalidate the bullish scenario. In this case, further downside targets would emerge at 1.13438 and 1.13259, potentially leading to a resumption of the previous downtrend.
Key Technical Levels
- Resistance Levels: 1.13628, 1.13728, 1.13839
- Support Levels: 1.13549, 1.13438, 1.13259
Fundamental Drivers
Switzerland’s GDP growth for Q4 fell short of expectations, registering an annualized growth rate of 1.5%, down from the previous 1.9% estimate. This weaker-than-expected economic performance has contributed to franc weakness, providing further support for the GBP/CHF pair.
Meanwhile, UK bond markets remain in focus, with investors awaiting the 15-year gilt auction later today. The auction is expected to yield 4.558%, with its results likely influencing market sentiment and demand for the British pound. If the auction sees strong demand, it could reinforce sterling’s strength, whereas a weak outcome might trigger short-term corrections in GBP pairs.
Conclusion
The GBP/CHF pair is testing key resistance at 1.13628, as buyers attempt to confirm a trend reversal. A break above this level would open the door to further gains, while failure to do so could see the pair retesting support at 1.13549. Market participants remain focused on Switzerland’s economic data and the UK bond auction, both of which will play a crucial role in determining the pair’s short-term trajectory.
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