CHF/GBP Outlook:
CHF/GBP is slightly positive and likely to move sideways, as it is trading above its recent average and currently within a stable mid-range. However, the absence of a clear driver may limit significant movements.
Key drivers:
• Rate gap: The Swiss National Bank’s (SNB) efforts to maintain moderate CHF strength contrast with the Bank of England's (BoE) cautious approach to interest rates amid economic uncertainties.
• Risk/commodities: Increased geopolitical tensions have elevated safe-haven demand for the CHF, while the GBP faces pressure from market volatility that typically weakens risk-sensitive currencies.
• One macro factor: UK labour market concerns have arisen due to job cuts in the service sector, complicating economic outlook and rate expectations for the BoE.
Range:
CHF/GBP is likely to drift within its recent 3-month range, with resistance near the current levels.
What could change it:
• Upside risk: A sudden shift in geopolitical tensions could boost the CHF significantly.
• Downside risk: A positive turn in UK economic data might support the GBP and lead to a stronger exchange rate.
