How to Trade the GBPCHF Currency Pair
The UK and Switzerland are important trading partners. Bilateral trade is worth over £31.7 billion a year. In fact, the UK is the fifth most important destination for Swiss investments.
The intertwined economies influence the price and movement of the British pound vs Swiss Franc (GBPCHF) currency pair.
In this ‘How to Trade the GBPCHF Currency Pair’ article, we cover how to analyse the GBPCHF chart, the important fundamentals that influence GBPCHF volatility and how to perform a GBPCHF forecast for the year.
Table of Contents
How does the GBPCHF Exchange Rate Work?
GBPCHF is the currency pair symbol for the British pound vs Swiss franc currencies. The currency pair’s exchange rate tells you how much one unit of currency equals in another currency.
For example, if the GBPCHF exchange rate was trading at 1.1592 it means that 1 British pound, will buy you 1.1592 Swiss francs.
Currency pairs are generally quoted with two prices, as shown below:
The price on the left side is referred to as the bid price. The price on the right side is referred to as the ask price. As the currency market is open 24 hours a day, 5 days a week these prices will move up and down during these times.
So how does this relate to trading GBPCHF?
- If you believe the exchange rate of GBPCHF will rise in value and want to buy then you buy at the current ask price in the market.
- If you believe the exchange rate of GBPCHF will fall in value and want to sell (or short sell) then you short at the current bid price of the market.
This is because Forex traders merely speculate on the price direction of a currency pair. This is made possible through innovative financial products such as contracts for differences (CFDs).
CFDs allow you to speculate on price direction so you can potentially profit from both rising and falling markets. You can also use Forex trading leverage which means you can control a bigger position size using a small deposit that is held as margin or collateral.
Of course, this will amplify both winning and losing trades. You can learn more about the benefits and risks of CFDs in ‘The CFD Trading Guide.’
GBPCHF Fundamental Analysis
Fundamental analysis involves the analysis of economic data such as interest rates, retail sales, consumer confidence and employment figures. However, the actions of central banks and governments can also influence the movement of GBPCHF.
Forex & Interest Rates
When central banks such as the Bank of England and Swiss National Bank increase or decrease interest rates it can have huge ramifications for the GBPCHF exchange rate. This is because international investors will often move their capital to countries (and therefore currencies) where they can earn a higher rate of return while moving their capital out from countries where they are receiving a lower return.
On 16 June 2022, the Swiss National Bank surprised the market by raising interest rates for the first time in 15 years. This led to a broader strength in the Swiss franc which ultimately led to a decline in the GBPCHF exchange rate.
Of course, the market doesn’t always move like this on interest rate hikes as markets move more on the expectation of future events happening. For example, the Bank of England spent the first half of 2022 increasing interest rates to the highest level in 14 years. However, the British pound remained
bearish during that time as investors believed it would have a negative effect on the economy.
Swiss Franc’s Safe Haven Status
The Swiss franc is also influenced by its safe haven status. In times of economic uncertainty, investors tend to move capital into safe haven assets such as the Swiss franc. As Switzerland has a strong economic system and a stable government, the currency is seen as a safe haven in troubling economic times.
Therefore, the direction of GBPCHF can also be influenced by global economic events, rather than the economic situation in the UK or Switzerland. Other safe haven assets include the Japanese Yen and Gold.
GBPCHF Technical Analysis
A more popular option when making GBPCHF buy or sell decisions is to use technical analysis. This is the study of price data using chart patterns and technical trading indicators to identify potential turning points in the market and to help understand the overall picture.
Technical analysis generally comes in three different forms:
1. Chart Patterns. These are patterns that develop on the chart that can help identify who is in control of the market – buyers or sellers or no one. Chart patterns include ascending triangles, wedge patterns, flag patterns and many others.
2. Candle Patterns. Candlesticks show the open, close, high and low price of a market during a fixed time. These can end in a variety of well-known candlestick patterns that can help understand the interaction between buyers and sellers. These include Haramis, dragonfly dojis, morning star patterns and many others.
3. Technical Indicators. Technical trading indicators analyse prices through different mathematical calculations and then visually depict that information as an indicator on the chart. This can include the MACD, Stochastic Oscillator, moving averages and others.
Automate Your Technical Analysis: The Technical Insight Lookup Indicator
Performing technical analysis well can take some time to learn. Fortunately, Admirals provides its clients with premium analytical tools such as the Technical Insight Lookup indicator.
With this tool, you can simply type in a market such as GBPCHF and it will find a range of technical analysis events taking place in that market across the short-term, intermediate-term and long-term.
For example, below shows the current (at the time of writing) technical events happening on GBPCHF:
You can use the Technical Insight Lookup indicator on thousands of stocks, commodities, indices and currencies.
This can not only help you find actionable trading ideas but also learn more about technical analysis patterns yourself.
Access the premium analytics feature today!
Long Term GBPCHF Forecast
The long-term price chart of GBPCHF shows it is trading between two significant levels of resistance and support. The monthly chart below shows a descending resistance line and a horizontal support line (two black lines on the chart).
The price has rejected the descending resistance line on multiple occasions from 2021. This has helped sellers to drive the trend lower. A long term GBPCHF forecast could see the price continue its trend back to the horizontal support level around 1.11140.
You can learn more about the different technical and fundamental events happening in the market by registering for your free place on the Admirals live trading webinars.
Tune into experienced traders as they go through different tools and techniques to aid in your trading decisions.
GBPCHF Trading Costs
There are a variety of trading fees to know when trading currency CFDs.
As you may have noticed in the GBPCHF quote window above, there is a difference between the bid price and the ask price. This difference is known as the spread and is one cost of trading.
In the example above, the difference between the bid price and ask price is 0.00061 (1.15828 - 1.15777). As the minimum contract size for GBPCHF is 0.0001 this means the spread of GBPCHF is 6.1 pips.
Why is the spread important? Let’s say you bought GBPCHF at the ask price of 1.15828. In order to break even on the trade the bid price (the price you sell at) will need to move 6.1 pips higher, as then you can sell at your buy price.
At the time of writing the average daily range of GBPCHF is around 120 pips.
When using Forex CFDs to speculate in the market, you are effectively borrowing capital from your broker to control a larger position size by putting a side a certain percentage of the trade value which is held as margin or collateral.
This means that if you hold any trades overnight then as your positions roll over to the next day there will be a financing fee to pay which is known as the swap fee. These are based on the two interest rates of a country and any broker markups.
These are transparently laid out on the GBPCHF Contract Specification page, or directly from the MetaTrader trading platform provided by Admirals.
GBPCHF Zero Spread Trading
With the Admirals Zero.MT5 or Zero.MT4 trading accounts you can trade with interbank-style spreads starting from 0 pips. The typical spread for GBPCHF on the Zero Accounts is just 3.2 pips.
While you can trade with much lower spreads, these accounts are commission based. This means there will be a commission to pay per trade and can be between 1.8 USD to 3.0 USD per lot traded (per 100,000 units of currency).
You can open a free demo trading account and see all of the trading features and products offered by Admirals for yourself while practising your trading skills until you are ready to go live.
Frequently Asked Questions on GBPCHF
Is GBPCHF Buy or Sell?
To analyse whether GBPCHF is a buy or sell it is important to analyse both the fundamental and technical analysis picture. This can help to identify the trend of the market and therefore who is in control of the currency pair – buyers or sellers.
What is the best time to trade GBPCHF?
While GBPCHF trades 24 hours a day, 5 days a week, most of the volatility in currency pairs happens around the opening of the major market sessions which includes the European session, US session and Asia session.
How do I trade GBPCHF?
You can trade GBPCHF by opening a Forex and CFD trading account with a regulated broker such as Admirals. This will enable you to access different tools and platforms to help in your trading decisions such as the Technical Insight Lookup indicator.
Admirals is a multi-award winning, globally regulated Forex and CFD broker, offering trading on over 8,000 financial instruments via the world's most popular trading platforms: MetaTrader 4 and MetaTrader 5. Start trading today!
This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.