UBS Predicts Range Trading for GBP/CHF as SNB and BoE Policies Diverge
UBS, a leading financial institution, has released its latest analysis on the GBP/CHF currency pair, suggesting expectations for range trading in the near future. The commentary highlights the contrasting monetary policies of the Swiss National Bank (SNB) and the Bank of England (BoE).
According to UBS, the SNB is nearing the end of its rate-cutting cycle, with one final cut expected in September before concluding its easing cycle. On the other hand, the BoE has just begun its easing cycle this month and is projected to continue reducing rates gradually until the end of 2025.
The differing timelines of these central banks’ actions are likely to influence GBP/CHF rates, potentially narrowing the yield difference and providing support to the Swiss franc against the British pound. Despite the SNB’s progress in rate cuts and ongoing reductions by the BoE, UBS suggests that strong services inflation in the UK and solid economic data could lead to moderate future rate cuts by the BoE.
UBS predicts that the GBP/CHF will trade around recent levels in the coming quarters, with 1.11 as the midpoint of the expected range. Investors are advised to monitor support levels at 1.07 and 1.06, with resistance at 1.15 and the May highs at 1.1670.
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Analysis:
UBS’ analysis of the GBP/CHF currency pair suggests that range trading is expected in the near term due to the diverging monetary policies of the SNB and BoE. The SNB is nearing the end of its rate-cutting cycle, while the BoE has just started its easing cycle and is projected to continue reducing rates gradually. This divergence in central banks’ actions is likely to impact GBP/CHF rates, potentially narrowing the yield difference and providing support to the Swiss franc against the British pound. Despite these factors, UBS predicts moderate future rate cuts by the BoE due to strong services inflation in the UK and solid economic data. Investors are advised to monitor key support and resistance levels in the currency pair for potential trading opportunities.