GBP/CHF Sellers Eye Further Downside Amid BoE Rate Cut Expectations
Market Overview
The British pound (GBP) remains under selling pressure ahead of the Bank of England’s (BoE) interest rate decision. Market sentiment is turning increasingly bearish as expectations rise that the BoE will cut rates, marking the start of a more aggressive monetary easing cycle. With economic growth in the UK remaining fragile and concerns over the labour market persisting, traders anticipate that the central bank may signal further rate reductions throughout the year.
Additionally, global trade tensions continue to weigh on market sentiment. The US-China tariff escalation and ongoing trade disputes could prompt central banks to accelerate policy easing, adding further downside pressure on the pound.
Meanwhile, the Swiss franc (CHF) retains its status as a safe-haven asset, benefiting from risk-averse market conditions and economic stability in Switzerland.
Technical Analysis
On the one-hour chart, GBP/CHF has entered a downward trajectory, with sellers regaining control following a reversal from the 1.12774 resistance level. The pair is now testing the immediate support at 1.12676. A break below this level would likely accelerate downside pressure, exposing 1.12572, 1.12517, and 1.12456 as the next key targets. These levels align with Fibonacci expansion zones (127.2%, 161.8%, and 200%), reinforcing their significance as potential turning points. RSI remains below 50, confirming bearish sentiment, while MACD remains neutral, suggesting a lack of strong momentum.
Should buyers regain control, a break above 1.12774 would invalidate the bearish setup, potentially shifting momentum back toward higher resistance zones.
Key Technical Levels
- Resistance Levels: 1.12676, 1.12774
- Support Levels: 1.12615, 1.12572, 1.12517, 1.12456
Fundamental Factors Driving GBP/CHF
Investors are closely monitoring BoE Governor Andrew Bailey’s comments during Thursday’s monetary policy statement. While a 25-basis point rate cut is widely expected, the focus will be on forward guidance regarding the pace of future easing measures. If Bailey signals a prolonged rate-cut cycle, the pound could face deeper losses as traders price in additional easing. However, if the BoE adopts a cautious stance, GBP could see some short-term stabilization against safe-haven currencies like CHF.
The Swiss franc continues to attract safe-haven demand, benefiting from political and economic uncertainty in global markets. With trade tensions escalating, risk-averse flows into CHF could limit any recovery attempts in GBP/CHF.
Conclusion
GBP/CHF remains in a bearish trend, with sellers targeting further downside following the break of key support levels. A decline below 1.12676 would confirm further weakness, while a break above 1.12774 would invalidate the bearish scenario. The BoE’s rate decision and forward guidance will dictate the pair’s next major move.
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