After a strong 800-pip rally from October 8 to October 17, GBPCHF has consolidated within a 70-pip range for over a month. The daily chart reveals a bullish pennant. Does this mean the currency pair is getting ready for another strong rally?
GBPCHF looks to be trading above the consolidation as political developments fueled the pound’s strength in the past few days. Recently, polls showed that Conservatives are ahead of Labour ahead of the general elections.
Today’s worse-than-expected data from Switzerland may sustain the currency pair’s move up the charts. The trade balance report showed a lower trade surplus at 3.50 billion CHF than what was estimated at 4.24 billion. This is not good news for the franc as the Swiss economy heavily relies on exports for economic growth.
The main event for today is going to be the first head-to-head debate between Prime Minister Boris Johnson and Labour Party leader Jeremy Corbyn. If polls continue to show that Conservatives still have a strong lead after the debate, we could see GBPCHF test 1.3403. The currency pair found resistance at this level on March 10 and April 28.
However, should the event trigger more uncertainty around Brexit, we could see demand for the pound weaken. The next support level is at 1.2480 where the currency pair could test support at the rising trend line (connecting the lows of August 9 and October 10) and its September 19 highs.