After a rapid growth at the beginning of the year, the rates consolidated in the range of 1.2530-1.2846 CHF. Nevertheless, the rates in the last few months have been expanding the consolidation range based on the shifting of the support line. A testing of the lows is also happening today. Risky assets have been under pressure in August due to the spread of the coronavirus and forecasts of the beginning of the fourth wave of the pandemic starting in September. Many countries are returning to lockdowns, and the UK has only recently emerged from a period of severe restrictions and is not ready to return to this regime again.
This week, the pound remains under pressure. In addition to the coronavirus pandemic, the value of the GBP is affected by disappointing reports on inflation and industrial output in the UK, as well as indirectly by macroeconomic statistics from China. At the same time, it is still one of the strongest currencies, and the downward movement in favor of the Swiss franc is very limited. Investors are not in a hurry to invest in the CHF with a negative yield. In the absence of macroeconomic reports on the Swiss economy, the value of the franc depends entirely on external factors, which are generally in favor of a safe currency, but there are not enough incentives for it to strengthen against a strong pound.
Investors are encouraged by good data on the UK labor market. Unemployment in the second quarter decreased by 0.1%. Next week, the volatility will decrease. We do not expect any important events for the GBP/CHF. At the same time, we believe that the flat trend will continue: there will be no trend reversal in the near future. As the maximum, the resistance line will decrease by several tens of pips. In the current situation, we are opening the deals to BUY today. The Stochastic oscillator would support this decision, pointing to the rates being in the oversold zone.
