CHF/GBP Outlook:
The CHF/GBP exchange rate is slightly positive, but likely to move sideways as it trades above its recent average while lacking a clear driver for a strong upward move.
Key drivers:
• Rate gap: The Swiss National Bank has maintained a cautious stance without significant rate cuts, while the Bank of England faces pressure to lower rates amid economic uncertainty.
• Risk/commodities: Increased geopolitical tensions are boosting the Swiss franc's safe-haven appeal, while mounting bets for a UK interest rate cut are weighing on the pound.
• One macro factor: High inflation in the UK remains a challenge, currently impacting the Bank of England's decision-making regarding interest rates.
Range:
CHF/GBP is likely to hold its position within the stable recent range as current dynamics offer no strong impetus for movement towards either extreme.
What could change it:
• Upside risk: A surprise decision from the Swiss National Bank to tighten policy could strengthen the CHF against the GBP.
• Downside risk: A significant deterioration in UK economic conditions prompting a more aggressive rate cut could weigh down the pound further.