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- As I look at the British pound against the Swiss franc, the first thing I notice is that the 1.11 level continues to be a significant support level.
- This has been the case for about six months now. And the 1.11 level has been important multiple times in the past. So this doesn't surprise me in the slightest.
- Quite frankly, I do think that this will come down to risk appetite more than anything else.
While the British pound is not necessarily the currency I want to own, that would be the US dollar. The reality is that I'd rather own the British pound than the Swiss franc if for no other reason than the interest rate differential.
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The Swiss National Bank recently had really just came right out and showed the world how concerned they were by cutting by 50 basis points. And the British on the other hand, still have relatively reasonable interest rates. Although the entire situation with the government's budget, of course, is going to continue to be a major source of trouble.
Reaching the Top
Now, when I look at this, I could see where we could go all the way to the 1.1350 level to the upside, and still basically be doing the same thing, just going back and forth. On the other hand, if we were to break down below the 1.11 level, perhaps by about 50 pips or so, then we could see a significant breakdown. That would more likely accompany major Swiss franc strength across the board as traders might be running for safety. Quite frankly, I don't see that. But one thing that I think you can probably count on is just a lot of choppiness and grinding. You do get paid at the end of every day owning this pair though. So that is something that might help you be a little bit more patient. This is a very flat market at the moment, but we're at the bottom of the range. So, it does make a certain amount of sense that buyers will be interested.
EURUSD Chart by TradingView
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