-1695203481.png)
SNB Rate Hike Seen
Following on from the FOMC tonight, traders will tomorrow turn their attention to the BOE meeting. However, ahead of that meeting, the SNB will step into the spotlight and expectations are geared towards the bank delivering a further rate hike. The Swiss government released its latest inflation outlook today and expects national CPI to hit 2.2% by year end. While down from the prior forecast of 2.3%, the projection is still above the SNB’s 0% - 2% CPI target. As such, traders are widely expecting the SNB to press ahead with a fresh hike at tomorrow’s meeting.
GBPCHF Downside Risks
SNB’s Jordan has been steadfast in sticking to his message that the bank stands willing to tighten as necessary. With this in mind, there are potentially some big opportunities opening up across FX markets tomorrow. Given the drop in UK inflation, the BOE might opt to pause its tightening program tomorrow or at least (along with hiking) signal that no further hikes are likely. In any case, the message is likely to be very different to that of the SNB which is expected to reaffirm its commitment to hiking as needed. As a result, GBPCHF looks vulnerable to a deeper move lower near-term.
Technical Views
GBPCHF
The market has been stuck in a very congested block of consolidation over recent months, underpinned by the 1.1076 level. However, if we see a split open up tomorrow between SNB and BOE policy, this might well drive a break of this level, turning focus to the 1.0918 level next.
.png)
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.