The British pound fell hard on Friday, as traders continue to see a lot of fear in the markets, using the Swiss franc as a safety asset.
GBP/CHF
The British pound has struggled a bit against the Swiss franc during the trading session on Friday as the 1.06 level continues to be an area of note as it's been both support and resistance. It is not a huge surprise to see this market fall a bit because there is a major risk aversion to the markets in general.
While the Bank of England is likely to stay somewhat on hold, the reality is that there are a lot of questions when it comes to whether or not the Swiss franc is the safety currency that everybody wants. I do believe at this point in time that the British pound is going to continue to soften against quite a few currencies, but the Swiss franc may not end up being one of them before it's all said and done.
Economic Headwinds and Central Bank Intervention
The main reason I say this is that Switzerland has a lot of the same issues that the United Kingdom has in so much as energy could be a problem. In fact, it could be a multi-year problem if this run of attacks on oil infrastructure in the Persian Gulf continues.
The other thing that may keep somewhat of a floor in this pair is the fact that the Swiss National Bank will sooner or later intervene and they have been very loud about possibly intervening. With this being the case, I'm looking for some type of bounce to start buying, but I need to see the pound recapture the 50-day EMA at the very least. As things stand right now, the safety currency du jour is the US dollar. It probably remains so.