Pound Gets Stronger after 3 Year High Inflation Mark

British MoneyPound to consolidate against the Swiss Franc at 1.2480 levels after the better than anticipated services PMI reading for the month of March.

Historically, in the month of April, Pounds used to rally against its opponents.

It was also an important factor for the rise of Pound currency against Swiss France which is considered as a safe haven currency.

While there are some experts who are of the opinion that the Pounds would again pull back after the Brexit related talks, but we think that the currency pair is likely to rise high in the coming future and the reason for the same is discussed below.

As per the Office for National Statistics, the headline inflation hits a 3-year high figure of 2.3% in the month of March 2017. The analysts expected for an increase of 2.2% in the consumer prices on an annualised basis. The reported figures were same compared to the last month. The inflation rise is primarily due to increase in fuel prices because of the weekend Pound.

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The Office for National Statistics also made an announcement that price for raw materials and goods bought by manufacturers – referred as PPI or namely Product Price Index increased by 0.4% month on month basis in March as compared to an expectation of analysts of a 0.5% decrease. The PPI reading falls by 0.1% in last month.

As far as the currency Swiss Franc is concerned, Bank of America is of the opinion that currency is losing its appeal fast as a safe haven currency. The argument of BoA based on the fact that Swiss Franc moved within a range of 0.75% in the month of March. As a matter of fact, volatility of currency pair EUR/CHF pair was just 5.2% last month. This compares with the volatility of 7.5% and 10% seen during US elections and Brexit referendum. According to analysts, the main reason for the less volatility and uptrend movement is because of the intervention policy of Swiss National Bank.

Thus, on the basis of the facts presented herewith, we believe that the currency pair GBP/CHF will remain bullish in the near future.

If you look at the image below, the currency pair has maintained a bullish triangle formulation. The rising momentum is also confirmed by MACD histogram’s positive reading. So, on the basis of this, we can easily confirm a current uptrend for the currency pair.

GBPCHF Pair April 13th, 2017

GBPCHF Pair April 13th, 2017

As a currency trader, you can benefit from this uptrends by opening a long position in the currency pair GBP/CHF near 1.2580. In order to minimise the unwanted losses, you need to place a stop order below 1.2460. For booking profit, you need to place the trade near 1.2800.

You need to buy a call option from a reputed broker if you want to establish a long position in the currency market. We recommend that you choose the expiry period of the trade for one week. It would be better if you are investing when the currency pair is cross trading near 1.2580.


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