GBP/CHF – Will BoE Join The Hawks?

#OPINIONLEADER##Signal#

 JUN 21, 2021

• BoE meets on Thursday at 1900 (GMT+8)
• Lockdown extension may impact central bank’s decision
• Straddle pattern in GBP/CHF (D1)

Chart 1: GBP/CHF D1 chart

The Bank of England (BoE) will be the limelight for the week as its committee members meet for a monetary policy decision this Thursday at 1900 (GMT+8). While the central bank is expected to hold its policy unchanged, with the recent increase in annual inflation to 2.1% which is within the central bank’s targeted range of 2-3% and the strong expansion in business activities, attention will be placed on whether QE tapering is currently under consideration. The market will also be keeping an eye on how many members voted for QE tapering. At the moment, it is forecasted that one member will be voting for QE tapering.

The recent spike in the number of COVID-19 cases in the UK has led to concerns over the Delta variant of the virus. As a result, UK Prime Minister Boris Johnson has extended the country’s lockdown to 19 July. The negative impact of the spike in cases will most likely be felt this month when more economic indicators are being released. It will be crucial to take note of what the central bank thinks of the recent spike in cases.

GBP/CHF has been trading within 250pips for the past 2.5 months, leading to the formation of a Straddle pattern in the daily chart. The tight range is indicated by the squeezing of the Bollinger Bands. The uncertainty of what to expect from the BoE presents us with both buying and selling opportunities of GBP/CHF as long as price breaks out of the current range.

Straddle Setup for GBP/CHF (D1)

Buy Stop order at 1.28600

Sell Stop order at 1.25400

Upcoming major news that may impact price movement of GBP/CHF

23 June – UK flash PMI data releases at 1630 (GMT+8)

24 June – Bank of England monetary policy announcement at 1900 (GMT+8)

24 June – U.S. final GDP q/q data release at 2030 (GMT+8)