Inside the Currency Market: Mechanics, Valuation, and Strategies

British Pound/Swiss Franc

This is an unusual pair, because both are tied to respective bond economic performance. The British pound present interest rate is 0.50 percent and Swiss franc is 0.25 percent. Swiss franc in Swiss markets rise when the Domestic Bond Index, the SBI, rises. If the SBI is up and the gilt price is up along with the FTSE, go long the British pound/Swiss franc and go short when both fall. In U.S. markets, the Swiss franc will rise and fall with Treasury bond prices, while the British pound will rise and fall with bond yields. All three markets will eventually trade together during a trading day. New York markets will dominate direction. Due to present interest-rate configurations, the overall trend is buy British pound/Swiss ...