Risk aversion has dragged risk assets like GBP lower this week while safe havens like CHF have gained pips.
Can the tides turn for GBP/CHF after the U.K.’s retail sales release?
I don’t know if you’ve read Pippo’s June U.K. Retail Sales Event Guide, but it’s possible that we’ll see better-than-expected retail activity for the third month in a row tomorrow.
Strong retail numbers would give the Bank of England (BOE) more room to raise its interest rates if needed. The increased probability of another BOE rate hike could then support GBP against major counterparts like CHF.
As you can see, GBP/CHF is already finding buyers around this week’s lows. Coincidentally, the move to the 1.1070 low also represents half of GBP/CHF’s daily average volatility.
GBP/CHF could turn higher from its 1.1070 support zone and maybe even complete a Double Bottom pattern breakout if the U.K.’s retail data surprise to the upside.
I’m looking at the 1.1100 “neckline” area as an initial profit target. After all, it’s not too far from the 1.1120 Pivot Point line and the 100 SMA on the chart.
Additional long positions might depend on overall risk sentiment though. The U.S. is printing its initial jobless claims and Philly Fed manufacturing numbers later today.
If today’s market themes encourage risk-taking, then I’ll also consider playing a possible upside breakout and adding long positions above the Pivot Point line.
What do you think? Will GBP/CHF see a bullish reversal before the week ends?
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