The GBP/CHF pair looks set to close the day lower, despite the intraday bounce that has limited losses to just 0.1% or 13.4 pips. In a day of light trading, the British Pound continued the slide from Thursday as lacklustre retail sales combined with reduced business activity in the manufacturing and services sectors to ensure the Pound ends the week under pressure.
Business activity in the manufacturing and services sectors of the UK economy contracted from the previous month’s figures, but not as much as the markets had predicted. This has allowed the pair to limit its losses around a key support level. In the meantime, the Swiss Franc is gaining some strength from some safe-haven demand as investors take a breather from risky assets.
The GBP/CHF could mark a second week to the downside if the pair does not climb significantly from present levels. Technically speaking, the price activity has narrowed into a descending triangle pattern. Given the prior downtrend that preceded the pattern’s formation, the bias is for the pair to break below the current demand zone that has formed the price support in the last four weeks at 1.15149 – 1.15383. Here is the GBP/CHF price outlook as the week closes out.
The breakdown of the descending triangle on the daily chart will aim to complete its measured move at the 1.13481 price pivot (24 March 2020 low). This move comes after the demand zone formed by the triangle’s lower border and the 1.15149 support (26 March 2020 low) gives way. An additional target to the south comes in at 1.11616, which is where another multi-year low is found (18 March 2020).
On the flip side, a bounce on the demand zone that takes out the 1.16817 resistance (29 June and 19 July highs) will bring the price activity toward the 1.17749 resistance, formed by the previous low of 22 June and prior high of 8 July. A break above this level gives the bulls access to the 1.19171 barrier while the 1.2000 psychological price mark (15 June low) and 1.20902 price level (29 April low) will form additional harvest points for the bulls if the price advance continues.
This post was last modified on Jul 22, 2022, 16:48 BST 16:48