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Trade of The Day – GBP/CHF

Facts

  • GBPCHF returned today above the 50-day exponential moving average (EMA50; dark violet) and the lower 2-week Bollinger Band (black).
  • The yield spread between UK and Swiss 10-year government bonds is 2.7 bps below its August 14 level (4.625% vs. 4.652%), which marked the local peak for the pair.

Recommendation

  • Position: Long (BUY) on GBPCHF at market price
  • Take Profit (TP): 1.09354 (TP1), 1.09670 (TP2)
  • Stop Loss (SL): 1.08070

Source: xStation5

Opinion

Yesterday, the GBPCHF exchange rate slid to its lowest level since July 31, 2026, driven by a proportionally larger appreciation of the Swiss franc than the pound relative to the US dollar following the US Treasury’s announcement of accelerated long-term bond buybacks. Switzerland, with its highly conservative public finances (a debt-to-GDP ratio of 16.1% in 2025, compared to 94.3% in the UK), remains a classic beneficiary of debt market realignments. Aside from broader global bond market trends, key core fundamentals for GBPCHF support the continuation of the broader trend despite yesterday’s sell-off. The magnitude of the decline in the 10-year yield spread between the two economies was far smaller than the drop in the spot market—the spread has already recovered roughly half of its losses from the last two sessions and is trading just below its local peak. Additionally, options market positioning shows no major shifts, though a higher premium continues to be paid for downside hedging on GBPCHF. Recent broad-based strength in the pound also reflects favorable investor sentiment toward the new government (particularly regarding the more fiscally cautious Chancellor). Consequently, Andy Burnham’s political honeymoon period could provide an extra tailwind for GBPCHF upside momentum.

Methodology

This recommendation was prepared based on a technical analysis of the GBPCHF chart and a fundamental analysis of the respective economies (monetary policy in Switzerland and the UK). The directional bias was determined using moving averages, Bollinger Bands, and bond market trends. Take Profit and Stop Loss levels were established using Fibonacci retracements and price action:

  • TP1 is set at the 23.6% Fibonacci level;
  • TP2 is set at the 38.2% Fibonacci level;
  • SL is placed at the 100.0% Fibonacci level, representing the low since July 13.
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Chart of The Day – USD/JPY Falls Ahead of a Key Test for the Yen

The USDJPY pair weakened by over 0.9% yesterday, significantly moving away from the key psychological barrier at the 160 level. Currently, the rate is oscillating around 158.5, awaiting the release of key data for the Japanese currency.

Department of the Treasury Intervention

Crucial for yesterday’s move were, of course, the words of Scott Bessent, the US Secretary of the Treasury, who announced plans yesterday to double the purchase of long-term US bonds. The program is scheduled to take effect on September 9 and run at least until November 4, when the Department of the Treasury will release new quarterly plans. The focus will be mainly on the long end of the curve, i.e., the purchase of Treasury bonds with long maturities. The decision means an increased supply of dollars on the market, which naturally led to a depreciation of the US currency. The yen was among the biggest beneficiaries. Figure 1: Performance of Selected Currencies (19.08.2026)

Source: XTB Research, 20.08.2026

Inflation Data

July inflation data from Japan is scheduled for release on Friday. The reading is expected at 12:30 AM. An hour later, we will receive the August PMI data. Figure 2: Japan CPI Inflation (2010 – 2026)

Source: XTB Research, 20.08.2026 Appetite for a hawkish surprise was whetted by the leading indicator for Tokyo published at the end of July. Core inflation in the Japanese capital unexpectedly accelerated from 1.6% to 1.9% y/y, beating the market consensus (1.7%). If Friday’s reading confirms this trend and shows rising price pressure, the Bank of Japan will gain further arguments for maintaining a restrictive monetary policy course. The next meeting is in less than a month, on September 18. Let us recall that in July, the BoJ kept interest rates unchanged (1%). A decision to hike could be a significant declaration for the market, leading to an increase in bets on further upward moves in the coming months.

Technical Analysis

Figure 3: USDJPY [D1] (18.12.2025 – 07.08.2026)

Source: xStation, 20.08.2026 Since April 2025, the USDJPY pair has been in a clear, stable uptrend. After setting a local peak around the 164 level, the market entered a phase of a very dynamic, deep downward correction. The current price is oscillating around 158.5, and the market is clearly looking for a solid bottom from which it could stage a more lasting rebound. The key barrier for the demand side currently remains the strategic resistance zone located around the psychological level of 160 (marked with a thick green line). This is a point of dual technical significance, as it almost coincides with the 100-period moving average. In recent days, buyers attempted to initiate an uptrend, but after reaching the vicinity of the 50% Fibo retracement and testing the long-term 150-period moving average (blue line, level around 159.2), they ran out of steam. The price fell below the key moving averages (EMA 50 and EMA 100). The RSI indicator, after a previous strong plunge, managed to rebound, but is currently sliding back to the 40.6 level. The positive bars of the MACD histogram are also shrinking.

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Offshore Yuan Strongest Since 2023

The offshore yuan strengthened to around 6.72 per dollar on Thursday, extending overnight gains and reaching its strongest level since February 2023, as persistent weakness in the US dollar continued to support Asian currencies. The greenback remained under pressure as expectations for further Fed rate hikes eased, while the announcement of expanded bond buybacks boosted demand for longer-dated Treasuries and weighed on the dollar. However, gains in the yuan were tempered by a softer-than-expected fixing, with the PBOC setting the daily midpoint at 6.7808 per dollar, signaling authorities’ continued preference for a measured pace of currency appreciation. On the monetary policy front, the central bank kept its benchmark lending rates unchanged at record lows for a fifteenth consecutive month. The one-year loan prime rate (LPR) was held at 3.0%, while the five-year LPR remained at 3.5%, reflecting policymakers’ cautious approach amid lingering domestic and external uncertainties.

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Trade of The Day – USD/CAD

Facts: USDCAD is trading in a downward trend since the beginning of July The pair reacted to the key resistance at 1.3907

Recommendation: Trade: Short USDCAD at market price Target: 1.3828, 1.3806 Stop: 1.3911

Opinion: USDCAD has been trading in a local downward move since the beginning of July. Looking at the pair at the H1 interval, one can see that the price reacted to the key resistance at 1.3907, following a local upward correction. The resistance is a result of the previous low from August 12. In addition the price returned below the upper limit of 1:1 structure, which according to the Overbalance methodology supports a downward scenario. The pair also sits below the 100-period moving average from the H1 interval. We recommend going short USDCAD at market price with two targets: 1.3828 and 1.3806 . We also recommend placing a stop loss order at 1.3911. Source: xStation

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Euro trims gains against British Pound after UK CPI inflation rises to 2.9%

  • EUR/GBP trims gains near 0.8555 in Wednesday’s early European session. 
  • UK CPI inflation jumped to 2.9% YoY in July, the highest rate for four months. 
  • ECB’s Lane said 3% Eurozone inflation remains too high. 

The EUR/GBP cross pares gains around 0.8555 during the early European trading hours on Wednesday. The British Pound (GBP) attracts some buyers against the Euro (EUR) following the UK inflation data. The European Central Bank (ECB) President Christine Lagarde’s is scheduled to speak later on Wednesday. 

Data released by the Office for National Statistics (ONS) on Wednesday showed that the UK headline Consumer Price Index (CPI) inflation climbed to 2.9% YoY in July from 2.6% in June. This figure came in line with the market expectations of 2.9%. The ONS said that it was driven by a “sharp increase” in gas prices following a rise in the household energy price cap. 

Meanwhile, the core CPI, which excludes volatile food and energy items, rose 2.6% YoY in July, versus 2.6% prior, hotter than the forecast of 2.5%. On a monthly basis, the headline CPI rose 0.3% in July, compared to an increase of 0.1% in June, in line with the market consensus of 0.3%.

Money market pricing shows City economists project one Bank of England (BoE) rate hike by the end of the year, which would lift the Bank rate from 3.75% to 4.0%.

On the Eurozone front, ECB chief economist Philip Lane said Tuesday that Eurozone inflation at 3% remains too high despite appearing modest compared to previous levels. Markets are now pricing in a continuation of the ECB hiking cycle. The ECB Watch Tool indicates a 90% to 94% odds of a 25 basis points (bps) hike to 2.50% at the September policy meeting. 

BoE expectations hold firm despite softer UK labour signals

Strategists at Scotiabank note that the weaker UK labour figures have done little to shift the policy outlook, with the “soft data [having] little impact on near-term BoE pricing (just 5bps of tightening risk reflected in Sep swaps)” and instead reinforcing the view that “market pricing for one more hike before year-end remains stretch.”

Chart Analysis EUR/GBP

Technical Analysis: EUR/GBP

In the daily chart, EUR/GBP keeps a mildly bearish bias as spot holds beneath the 20-day simple moving average of the Bollinger Bands and well below the 100-day simple moving average. Price is situated between the lower and middle Bollinger bands, suggesting a capped recovery tone, while the 14-day Relative Strength Index around 50 signals neutral momentum that neither challenges nor offsets the prevailing downside structural pressure.

On the topside, initial resistance emerges at the Bollinger middle band near 0.8555, followed by the upper Bollinger band around 0.8580, ahead of the more meaningful barrier at the 100-day SMA clustered near 0.8620. On the downside, the lower Bollinger band at 0.8532 forms immediate support, and a clear break beneath this floor would likely open the way to a deeper retreat in the cross.

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USD/IDR Price Trades near 17,850 after pulling back from moving averages

  • USD/IDR may fall toward the lower rectangle boundary around 17,750.
  • The 14-day Relative Strength Index at 43.48 signals fading bullish momentum.
  • The pair may rebound toward the immediate barrier at the 50-day EMA of 17,896.

USD/IDR depreciates after registering modest gains in the previous day, trading around 17,870 during the Asian hours on Wednesday. The technical analysis of the daily chart suggests that the pair is remaining within the rectangle, indicating a consolidation phase.

The USD/IDR pair is holding a bearish near-term bias as spot remains capped beneath both the nine-period and 50-period Exponential Moving Averages (EMAs). The clustering of these short- and medium-term EMAs just above price suggests topside attempts are vulnerable, while the 14-day Relative Strength Index (RSI) at 43.48 points to fading bullish momentum without yet reaching oversold territory, keeping the pair under mild downside pressure.

The USD/IDR pair may fall toward the lower boundary of the rectangle around 17,750, followed by the three-month low of 17,600, which was recorded on May 20.

USD gains as risk aversion weighs on Asia FX

Strategists at UOB Group highlight that renewed caution in global markets has reinforced demand for the Dollar, noting that the “USD firmed up against most Asia FX as risk aversion returned as the key near-term driver.” They point out that the shift in sentiment has left regional currencies on the back foot, with investors gravitating toward the relative safety of the Greenback as risk appetite fades.

On the upside, the immediate barrier lies at the 50-day EMA of 17,896, followed by the nine-day EMA at 17,902. A break above these moving averages would reinforce the bullish bias and support the USD/IDR pair to approach the upper boundary of the rectangle around 18,170, followed by the all-time high of 18,247, reached on June 8.

Goolsbee’s cautious optimism on inflation keeps Dollar focus on Fed path

Fed’s Goolsbee delivered a notably softer tone, with an FXS Speechtracker score of 4.6/10, well below the 6.8/10 historical average, signaling reduced hawkish conviction. The emphasis on “a little bit better” inflation readings and hope that tariff- and oil-driven price spikes prove one-off suggests growing confidence that inflation can drift back toward 2%, but without declaring victory. The characterization of the US economy as “steady” reinforces a gradualist stance, implying the Fed can stay patient while watching incoming data.

The FXS Fed Sentiment Index fell 2.36 points to 134.61, indicating a modest pullback in perceived hawkishness. Despite the decline, the index remains firmly above the 100 neutral mark, underscoring that Fed policy is still viewed as hawkish overall, even as Goolsbee’s softer tone drags the FXS Speechtracker score below the established baseline.

USD/IDR: Daily Chart
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British Pound shows limited reaction to expected increase in UK headline inflation

  • The British Pound moves mildly against the Japanese Yen after the UK CPI data for July.
  • The UK headline CPI growth remains higher at 2.9% YoY, as expected, while the core CPI remains steady at 2.6% YoY.
  • Hawkish BoJ bets help Japanese Yen stage a strong recovery.

The British Pound (GBP) reflects a slight market action against the Japanese Yen (JPY) near its day’s low at around 215.70 after the release of the United Kingdom (UK) Consumer Price Index (CPI) data for July.

The Office for National Statistics (ONS) has reported that the headline inflation accelerated to 2.9% Year-on-Year (YoY), as expected, from 2.5% in June. The core CPI – which excludes volatile components of food, energy, alcohol and tobacco – grew at a steady pace of 2.6% YoY, while it was expected to slow down to 2.5%.

On a monthly basis, the headline CPI data arrives at 0.35, as expected, higher than the previous reading of 0.1%.

Signs of headline price pressures re-accelerating after slowing down in June indicate that UK inflation concerns remain intact, a scenario that could force traders to reassess Bank of England (BoE) interest rate expectations. Currently, financial markets expect the BoE to hold policy rates at their current levels the entire year.

UK wages seen easing as TD Securities expects BoE to stay on hold

According to TD Securities, the UK labour market is set to “continue along the steady but lacklustre path seen since the start of the year,” with June delivering a “100k change in employment on a 3m/3m basis (mkt: 120k; prior: 148k).” On the wage side, the bank expects “a fair drop in the headline average weekly earnings growth measure to 4.0% 3m/y (mkt: 4.0%) from 4.3% in May, as March’s outsized bonus figures fall out of scope and reverse the upward pressures seen in the past three months.”

TD Securities anticipates that “ex-bonus wage growth should remain at 3.4% 3m/y (mkt: 3.4%) while private earnings ex-bonus growth is set to dip to 2.7% 3m/y (mkt: 2.8%; prior: 2.9%).” The bank notes that “the latter two measures sit within reach of levels consistent with the BoE’s inflation target,” a development that is “likely reassuring the majority of the MPC that labour market dynamics are limiting second-round inflation pressures and supporting a majority vote to keep Bank Rate on hold.”

Meanwhile, the Japanese Yen (JPY) outperforms its major currency peers on Wednesday after two weeks of underperformance, as financial markets are confident that the Bank of Japan (BoJ) will raise interest rates by 25 basis points (bps) to 1.25% in the September policy meeting.

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Swiss Franc strengthens as US Dollar falls on fading Fed rate hike expectations

  • USD/CHF drops as weak US retail sales and cooling inflation lower September rate hike odds to 35%.
  • CME FedWatch tool suggests traders are now pricing in just a 35% chance of a rate hike in September.
  • The Swiss National Bank kept its policy rate at 0% and is expected to hold rates there through 2027.

USD/CHF depreciates after registering modest gains in the previous day, trading around 0.8120 during the Asian hours on Wednesday. The pair depreciates as the US Dollar (USD) weakens amid easing expectations of a US interest rate hike next month. Recent economic data showed that US Retail Sales dropped in July for the first time in nine months, compounding concerns after unexpected job losses last month and tame CPI inflation figures.

While the Fed left interest rates unchanged at its last meeting, three officials dissented in favor of a rate hike, leaving traders looking to the upcoming minutes for deeper insight into the division within the central bank. According to the CME FedWatch tool, traders now price in just a 35% chance of a rate hike at the Fed’s September meeting, down significantly from 47% a month earlier.

Switzerland’s economic growth, excluding major sporting events, accelerated sharply to 1.5% quarter-on-quarter in the second quarter of 2026. This momentum was reinforced by foreign exchange interventions, which helped protect Swiss exporters by curbing safe-haven capital flows into the Swiss Franc and preventing excessive currency appreciation.

Meanwhile, inflationary pressures continued to ease, with Swiss inflation slowing to 0.4% in July, its lowest level in four months. In response, the Swiss National Bank (SNB) maintained its policy rate at 0% during its latest meeting and is expected to hold interest rates at this level through 2027, treating any further rate cuts as a contingency rather than the baseline path. While financial markets are pricing in a rate hike as early as March 2027, most economists anticipate the first increase will occur in early 2028.

Analysts at Rabobank highlighted that, “for years, the Swiss central bank has struggled with the impact of haven flows into the CHF,” noting that the recent bout of Swiss Franc softness is likely a welcome development for the SNB after its prolonged battle against persistent inflows.