Our calculation matrix is suggesting Pound could drop to as low as 1.24 against Franc. With Pound currently trading at 1.402 against Franc, that is one big trade, with possibility of 1600 pips gain. Due to the probable size of the gains, it is better to keep stop loss around 1.48 area.
Thanks to weaker Dollar and some contrarian positions, Pound has gained in recent days from 1.38 area to as high as 1.477 against Dollar, more or less against all of its major trading counterparts. However, this week is relatively weaker.
This weak, UK economic data for April (PMI), pointed to considerable weakening of economy, probably due to fear of Brexit and as vote nears, which is on June 23rd that same fear is likely to grab the traders and investors once more.
Franc on the other hand, likely to benefit from grater uncertainties and volatilities, though Swiss National Bank (SNB) likely to maintain tight grip over exchange rate, during the period, especially against Euro.
Even then, a 2:5 risk reward makes this pair (GBP/CHF) very attractive short.
Trade idea –
Sell Pound at 1.4 against Franc, targeting 1.24, with stop around 1.48, however the trade may take some time to reach target.
1.35 area likely to act as near term support, while 1.435 will act as resistance.
Though 1.24 area is the target, profit bookings may begin as early as 1.26, January, 2015 low.
The material has been provided by InstaForex Company – www.instaforex.com