GBP/CHF Bounces Back as Carry Trade Continues to Gather Momentum

The GBP/CHF currency pair has seen a strong rally against the Swiss franc in trading on Thursday, according to Christopher Lewis of DailyForex. The pound bounced back from the crucial 50-day EMA, which suggests a continuation of the overall carry trade.

Carry trades involve borrowing money in a low-interest-rate currency and investing it in a high-interest-rate currency, which can be lucrative but also carries significant risk. Lewis notes that the ability to get paid daily is a major driver behind this trend.

The GBP/CHF market has been volatile, with some traders seeking safe-haven currencies like the Swiss franc due to concerns over US bond-buying and potential financial issues. However, since the 50-day EMA was tested, the pair has recovered about 40% of its losses, indicating a strong reaction in the next trading session.

Given this analysis, Lewis remains bullish on the GBP/CHF pair and the carry trade as a whole, citing an uptrend and a favorable environment for long positions. He also highlights the psychological importance of the 1.10 level, which may have contributed to some profit-taking before the bounce back.