CHF/GBP Outlook:
Likely to increase as the CHF is above its recent average and near recent highs, supported by safe-haven demand.
Key drivers:
• Rate gap: The Swiss National Bank is considering reintroducing negative interest rates to manage a strong CHF, while the Bank of England's dovish stance may prevent GBP strength.
• Risk/commodities: Ongoing global uncertainties are boosting demand for the CHF as a safe haven, especially amid geopolitical tensions.
• One macro factor: The recent UK economic indicators are mixed, with inflation rising but retail sales showing strong growth, leading to a cautious outlook for GBP.
Range:
Expect CHF/GBP to hold near recent highs while remaining within its established range.
What could change it:
• An unexpected increase in UK GDP growth could provide a lift to the GBP.
• A significant shift in global risk appetite could reduce demand for the CHF as a safe haven.