GBP/CHF Outlook:
The GBP/CHF exchange rate is likely to decrease as it is currently trading below its recent average and near the lower end of its three-month range. Investors appear concerned about the potential interest rate cut by the Bank of England, which is weighing on the pound.
Key drivers:
• Rate gap: The Bank of England's cautious approach contrasts with expectations of more aggressive cuts from the U.S. Federal Reserve, which is putting pressure on the GBP.
• Risk/commodities: Strong demand for the Swiss franc has emerged as a safe haven amid global uncertainties, enhancing its value against the GBP.
• One macro factor: Concerns over potential political instability in the UK, particularly following a challenging byelection, are adding to the downtrend for GBP.
Range:
The GBP/CHF pair is likely to drift within its recent range, with the upper limit acting as a tough resistance point.
What could change it:
• Upside risk: A surprising increase in UK consumer confidence could reduce speculation about a rate cut from the BoE.
• Downside risk: Additional pressure could come from disappointing UK retail sales data, further supporting expectations for a rate cut.
