FxWirePro: GBP/CHF breaks above 21-EMA, pound gains fresh momentum ahead of BoE decision on Thursday

Chart - Courtesy Trading View 

GBP/CHF was trading 0.52% higher on the day at 0.1690 at around 09:15 GMT, outlook is turning bullish.

Data released by IHS Markit earlier on Wednesday showed UK services sector activity expanded less than expected in July. 

The seasonally adjusted S&P Global/CIPS UK Services Purchasing Managers’ Index (PMI) was revised lower to 52.6 in July versus 53.3 expected and 53.3 – last month’s flash reading.

The Composite PMI arrived at 52.1 in July vs. 52.8 expected and 52.8 previous reading. The British pound largely ignores dismal PMI data, keeps upside intact. 

GBP/CHF has shown a break above 21-EMA which was stiff resistance, capping upside for many sessions.

Momentum has turned bullish. Stochs and RSI are biased higher, RSI is above the 50 mark. Chikou span is also biased higher.

The Bank of England (BoE) is scheduled to announce its monetary policy decision on Thursday and is expected to hike interest rates by 50 bps.

The markets, however, seem divided over further rate hikes. Hence, the focus would be on the near-term policy outlook, which will influence price action in the British pound.

Major Support Levels: 

S1: 1.1646 (21-EMA)

S2: 1.1625 (5-DMA)

Major Resistance Levels: 

R1: 1.1729 (Upper BB)

R2: 1.1795 (55-EMA)

Summary: GBP/CHF poised for further gains. Technical indicators support upside in the pair. BoE decision will determine further price action.