With most Asian markets on holiday for the Lunar New Year celebration, Aussie traders on the sideline ahead of tonight’s monetary policy decision, and many US traders out of the office for the informal post-Super-Bowl-Monday-“Holiday,” we’ve seen a predictably slow start to this week’s trade in the FX market.

Beyond a slight lean toward strength in the greenback today, the only other noteworthy development was a short-lived spiked in the pound. Toward the end of today’s European session, sterling spiked by around 50 pips against all of its major rivals, seemingly without explanation. The move has since completely reversed itself, leaving an unsightly long “wick” on the daily candles.

Today’s short-lived excitement aside, GBP/CHF is drawing plenty of eyeballs from a slightly longer-term perspective. The pair surged over 800 pips from trough to peak through January, before spending the last week consolidating at the top of that rally in a comparatively tight range.

This price action has created a textbook “bullish flag” pattern, suggesting that buyers are still in control and foreshadowing a strong rally if we see GBP/CHF break above its resistance zone in the 1.3100 area, where we also saw the pair top out in October and November of last year.

(Click on image to enlarge)

Source: TradingView, FOREX.com

In terms of catalysts for a potential breakout, the most notable data release will be Thursday’s BOE meeting, so readers may want to revisit GBP/CHF if the Bank of England strikes a hawkish tone later this week.