The British pound has been slightly positive against the Swiss franc during the trading session on Thursday despite the fact that risk appetite has struggled a bit.
Quite frankly, the interest rate differential between these two currencies continues to make the British pound attractive, but I do see a lot of noise just above the 1.06 level that continues to keep a bit of a lid on this pair.
If we can break above the 1.0650 level, then we start to focus on the 200-day EMA. Anything above there I think is a longer-term buy and hold type of scenario and you certainly get paid to wait here.
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Short-term pullbacks, and that certainly looks like it could be a real possibility here, could be buying opportunities with the 1.05 level offering support. There are enough signs of concern out there to think that maybe we have a situation where the Swiss franc is attractive, but given enough time we have to assume that the Swiss National Bank will eventually do something if the Swiss franc continues to strengthen and the interest rate differential by itself makes this pair very expensive to short.
I think most of the people selling the GBP/CHF pair are probably just closing out positions from the previous session. The 50-day EMA sits just below the 1.0550 level and that in and of itself might be of interest as well. I do not short this pair. The interest rate differential pays you quite nicely to hang onto it to the upside and I will continue to look at it through that prism. If we really start to break down and go below the 1.05 level, then I'll be looking for a bounce, maybe getting involved to the long side on the right-hand side of the V if I get that opportunity.
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