GBP/CHF Bounces Back as Carry Trade Favors Pound Over Franc
The British pound has continued its recovery against the Swiss franc on Monday, following last week's Treasury Department announcement that doubled the buyback of 30-year bonds in the United States.
According to Christopher Lewis, a technical analyst at DailyForex with over two decades of trading experience, the market was 'a little bit crazy' after the announcement, but it ultimately turned out to be stabilizing rather than a sign of financial weakness or quantitative easing.
The interest rate differential favors the British pound over the Swiss franc, making it an attractive carry trade pair. Lewis notes that this is one of his favorite pairs to trade when the carry trade is in vogue, which it currently is.
The 50-day EMA has provided significant support for the GBP/CHF pair, and Lewis will be watching the levels of 1.0950 and 1.10 closely. He is already long on this market and sees no issues with adding to his position, describing the differential as 'wide enough to drive a truck through'.