Buy GBPCHF at 1.2530, target: 1.2900, stop: 1.2250
We are anticipating GBPCHF upside linked to continued equity rotation towards cheaper valuations, a widening yield spread between the UK and Switzerland and a still hawkish BoE. The link between the CHF and risk sentiment appears to have weakened.
We also expect the BoE to remain hawkish. Although we do not anticipate the BoE to surprise on the hawkish side, we still think that the stance will remain hawkish given the uptrend in inflation expectations and a very tight labour market. GBPUSD is likely to follow US front-end rates and the dollar, but other sterling crosses should find support. We chose to express this view by selling the lowest yielding currency in G10.
So we have found our levels on weekly and daily charts and are putting the TP before the major resistance and psychological level of 1.29 and putting our SL under the support, with decent room to consider a fake break.
We also expect the BoE to remain hawkish. Although we do not anticipate the BoE to surprise on the hawkish side, we still think that the stance will remain hawkish given the uptrend in inflation expectations and a very tight labour market. GBPUSD is likely to follow US front-end rates and the dollar, but other sterling crosses should find support. We chose to express this view by selling the lowest yielding currency in G10.
So we have found our levels on weekly and daily charts and are putting the TP before the major resistance and psychological level of 1.29 and putting our SL under the support, with decent room to consider a fake break.