The Pound Sterling is expected to reach 1.14 against the Swiss Franc in the next three months, according to Rabobank. Despite the risk of an SNB rate cut, the CHF remains strong. However, the SNB is likely to act cautiously to avoid market instability and political backlash from currency intervention.
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The forecast of the Pound Sterling reaching 1.14 against the CHF
According to the latest exchange rate projections from Rabobank, the GBP/CHF pair will follow a measured trajectory over the coming year. In the immediate term, analysts predict the pair will trade at 1.12 within one month, reflecting cautious near-term sentiment in currency markets.
For the Pound Sterling, forecasts show the currency strengthening slightly to reach 1.14 against the Swiss franc within three months. Following this peak, Rabobank anticipates a slight moderation to 1.13 at both the six-month and nine-month horizons. After that, the GBP/CHF returns to 1.14 by the twelve-month mark.
The CHF is expected to stay strong despite growing risks of an SNB rate cut.
The Swiss Franc has demonstrated remarkable strength since early April, emerging as the top-performing G10 currency during this period. This impressive performance comes despite increasing market expectations that the Swiss National Bank (SNB) may cut interest rates back into negative territory.
“The chances of another rate cut at the June policy meeting have increased significantly on the back of the surge in the value of the CHF,” notes Jane Foley, Senior FX Strategist at Rabobank.
The Swiss Franc’s appreciation has been largely driven by President Trump’s tariff escalation. This situation presents a challenging policy environment for the SNB, which must balance concerns about the CHF’s strength against the political sensitivities of intervention.
Direct intervention to weaken the CHF carries significant risk in the current political climate, as such actions could prompt accusations from the US Treasury that Switzerland is manipulating its currency.
“It is unclear how Trump would respond to FX intervention by the Swiss authorities, but there is no doubt it would be politically very sensitive,” Foley explains when discussing the Swiss Franc outlook.
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Long-term expectations for the value of the CHF
Rabobank’s outlook suggests the CHF will maintain its broad strength throughout the remainder of the year, even if some profit-taking on Swiss Franc long positions. The bank plans to revise its G10 forecasts to reflect moderately higher CHF projections, acknowledging the currency’s resilience in uncertain market conditions.
“We expect the value of the CHF to remain firm given the heightened degree of uncertainty in the market,” emphasizes Foley.
Switzerland’s longer-term growth prospects appear subdued, facing headwinds from aggressive US tariffs and potential additional levies on pharmaceuticals. The SNB’s already modest inflation forecasts for the CHF could face further downward revisions if global trade tensions persist.
“Last month, ahead of Trump’s tariff announcement, Switzerland’s State Secretariat for Economic Affairs had revised down its forecast for domestic growth,” Foley points out, highlighting potential challenges for the Swiss Franc.
Because of the complex situation, the SNB is expected to move carefully to avoid market instability and negative consequences from its actions. Although the SNB can still intervene in the currency market, it will likely use this option rarely due to recent events and political concerns.
“While the SNB maintains FX intervention as a policy tool, this too carries risk,” concludes Foley, underscoring the delicate balance the Swiss monetary authorities must strike in navigating the challenging economic landscape ahead for the CHF.
In conclusion, the GBP/CHF exchange rate is expected to show gradual movement over the next year. While the Swiss Franc continues to perform well, the SNB’s cautious approach to monetary policy and currency intervention will be key in maintaining stability amidst global uncertainties.
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