The GBPCHF currency pair has embarked on a noteworthy rally, displaying back-to-back weeks of gains and poised for a third. The primary driver behind this surge lies in the steadfast resilience of the British Pound.
Recent economic indicators unveiled the robust standing of the U.K.’s economy, with the November 2023 GDP surpassing expectations at 0.3%. The S&P Global Composite PMI for December underscored this strength, rising to 52.1, primarily driven by a robust services sector. This ascent above the pivotal 50 mark signifies expansive progress, a testament to the U.K.’s economic vigour, consequently bolstering the British Pound. The positive momentum extends to the labour market (a key driver of inflation), witnessing a significant employment change of 73K, surpassing forecasts of 50K. This not only hints at potential inflationary pressures fuelled by a resilient labour market but also enhances the narrative of prolonged higher interest rates in the U.K., potentially boosting the British Pound.
Technical
The GBPCHF currency pair has embarked on a robust short-term uptrend, recording an impressive ten consecutive days of gains.
Initially descending from a resistance level at 1.10854, the pair found support at 1.06358 amid oversold Relative Strength Index (RSI) conditions. A subsequent retracement brought the pair within striking distance of the critical 61.80% Fibonacci Retracement Golden Ratio.
A breakthrough above this golden ratio could signal further upside momentum, potentially paving the way for a retest of the 1.10854 resistance level. However, caution is warranted as the overbought RSI conditions suggest a possible reversal, particularly if the Golden Ratio acts as an intermediate resistance level. In such a scenario, the 50% level may serve as a short-term downside point of interest.
Summary
The GBPCHF stands out with solid weekly gains, propelled by the British Pound’s resilience amid robust economic indicators. The currency pair’s technical landscape, marked by a ten-day uptrend, reveals potential for further gains, with the critical 61.80% Fibonacci Retracement Golden Ratio acting as a key level. A breakthrough could pave the way for a retest of the 1.10854 resistance level, although caution is advised, considering overbought conditions and the potential for a reversal.
Sources: Office for National Statistics, S&P Global, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
Disclaimer: Trive South Africa (Pty) Ltd (hereinafter referred to as “Trive SA”), with registration number 2005/011130/07, is an authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act, 37 of 2002. Trive SA is authorised and regulated by the South African Financial Sector Conduct Authority (FSCA) and holds FSP number 27231. Trive Financial Services Ltd (hereinafter referred to as “Trive MU”) holds an Investment Dealer (Full-Service Dealer, excluding Underwriting) Licence with licence number GB21026295 pursuant to section 29 of the Securities Act 2005, Rule 4 of the Securities Rules 2007, and the Financial Services Rules 2008. Trive MU is authorized and regulated by the Mauritius Financial Services Commission (FSC) and holds Global Business Licence number GB21026295 under Section 72(6) of the Financial Services Act. Trive SA and Trive MU are collectively known and referred to as “Trive Africa”.
Market and economic conditions are subject to sudden change which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. Trive Africa and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered. Please consider the risks involved before you trade or invest. All trades on the Trive Africa platform are subject to the legal terms and conditions to which you agree to be bound. Brand Logos are owned by the respective companies and not by Trive Africa. The use of a company’s brand logo does not represent an endorsement of Trive Africa by the company, nor an endorsement of the company by Trive Africa, nor does it necessarily imply any contractual relationship. Images are for illustrative purposes only and past performance is not necessarily an indication of future performance. No services are offered to stateless persons, persons under the age of 18 years, persons and/or residents of sanctioned countries or any other jurisdiction where the distribution of leveraged instruments is prohibited, and citizens of any state or country where it may be against the law of that country to trade with a South African and/or Mauritius based company and/or where the services are not made available by Trive Africa to hold an account with us. In any case, above all, it is your responsibility to avoid contravening any legislation in the country from where you are at the time.
CFDs and other margin products are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how these products work and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. See our full Risk Disclosure and Terms of Business for further details. Some or all of the services and products are not offered to citizens or residents of certain jurisdictions where international sanctions or local regulatory requirements restrict or prohibit them.
