- The British pound has rallied significantly during the trading session on Tuesday, as we continue to see a lot of volatility in this pair.
- After all, there are a lot of questions about the overall risk appetite and where we are going next, and this pair is a great barometer of where risk appetite is at the moment.
- You have the Swiss franc, considered to be one of the “ultimate safety currencies”, and on the other end, you have the British pound which while not necessarily the complete picture of taking risk, it certainly isn’t considered to be a “safety currency” by most traders.
Looking for a Bottom
At this point, it looks like we are looking for a bottom in this pair, and I do believe that the 1.07 level is a potential candidate for such a thing. We’ve seen the 1.07 level offer significant support, an area that has been fought over multiple times. That being said, we need to see more risk appetite enter the psyche of traders in general, as there has been a lot of concerns around the overall global economy. If that’s going to be the case, then it makes a certain amount of sense that the Swiss franc may attract a certain amount of interest. On the other hand, if we do start to see stock markets and other global assets rally a bit, that could push this pair higher as traders will look for a better return.
That being said, there are a lot of concerns out there about the global economy, not the least of which would be the fact that the employment numbers out of the United States were horrible last week, and Canada has actually started to lose jobs. Because of this, I believe that the 1.08 level is an area that we will have to look very closely. If we can break above there, then the 1.0845 level is an area of interest, as it also is where we see the 50 Day EMA. Anything above that level could be very interesting indeed for those who are bullish.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
