UBS Sees GBP/CHF Range Limiting Amid Central Bank Moves By Investing.com

UBS’s latest commentary on the currency pair points to expectations for near-term range trading, with its analysis highlighting the contrasting monetary policies of the Swiss National Bank (SNB) and the Bank of England (BoE).

The bank noted that the SNB is nearing the end of its rate-cutting cycle, while the BoE just started its easing cycle this month and is expected to continue cutting rates gradually until the end of 2025.

The SNB, having initiated its rate cuts earlier than many of its peers, is expected to make a final cut in September before ending the easing cycle. In contrast, the BdE’s recent start of rate cuts is expected to be executed in a gradual manner, with cuts every quarter.

The differing timing of central bank actions is seen as a factor that will influence GBP/CHF rates, potentially narrowing the yield spread and providing some support to the Swiss franc against the British pound.

Despite the NBS nearing completion of interest rate cuts and ongoing BoE cuts, UBS suggests that strong UK services inflation and strong business and consumer economic data could mean that future BoE rate cuts will be moderate.

UBS predicts that GBP/CHF will continue to trade around recent levels for the coming quarters, with 1.11 being the midpoint of the expected range. The currency pair broke through major support levels during its last sell-off, and UBS advises investors to monitor support levels at 1.07 and 1.06, with resistance at 1.15 and May highs at 1.1670.

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