Bias: Bearish-to-range-bound, as the CHF is currently below the 90-day average and in the lower half of the 3-month range.
Key drivers:
- Rate gap: The Swiss National Bank maintains a low policy rate amid low inflation, while the Bank of England is expected to decrease rates further but remains cautious.
- Risk/commodities: Recent global trade tensions, particularly US tariffs, have increased pressure on the Swiss economy and the CHF.
- One macro factor: UK GDP growth is projected to slow down, which may lead to a weaker GBP over time, impacting its strength against the CHF.
Range: As CHF/GBP has traded within a stable range, it is likely to hold near current levels but could drift lower without significant changes.
What could change it:
- Upside risk: A surprising improvement in UK economic data could strengthen the GBP against the CHF.
- Downside risk: Continued strong performance of the CHF or additional tariffs affecting Swiss exports may further weaken the CHF.