UBS Sees GBP/CHF Recovery After Near-Term Weakness

GBP/CHF Faces Short-Term Pressure Before Recovery

UBS Switzerland AG projects the GBP/CHF pair will face downward pressure in the near term, driven by the Bank of England's easing cycle and political uncertainty. However, strategists anticipate a gradual recovery in the latter half of 2026 and into 2027.

Current Market Drivers

The British pound is constrained by the Bank of England’s monetary easing and political uncertainty ahead of May elections. In contrast, the Swiss franc benefits from its safe-haven appeal amid geopolitical risks. The Swiss National Bank's policy is expected to limit excessive franc appreciation, providing a floor for the currency pair.

Revised Forecasts and Long-Term Outlook

Reflecting these dynamics, UBS has revised its quarter-end forecasts for June and September down to 1.06 from 1.08, while maintaining a 1.07 target for December. The bank introduced a new March 2027 forecast of 1.08. The long-term recovery is predicated on fading UK-specific risks and a reduction in safe-haven flows into the franc.

Summary

Looking ahead, as the UK political landscape clears and the BoE's easing cycle concludes, GBP/CHF is expected to trend higher. Key technical levels to monitor include support just below 1.02 and resistance near 1.08 and 1.10.

FAQ

Q: Why is GBP/CHF expected to be weak in the short term?
A: Due to the Bank of England's ongoing monetary easing cycle and political uncertainty in the UK.

Q: What is UBS's new forecast for GBP/CHF for March 2027?
A: UBS has introduced a forecast of 1.08 for March 2027.

Source: Investing.com