UBS predicts currency movements amidst rate cuts and central bank moves

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EUR/CHF Pair Forecast and Analysis

  • 💶 UBS forecasts a slight decline in the EUR/CHF currency pair to 0.93 in the second half of 2024.
  • 🏦 Swiss National Bank expected to make final interest rate cut in September while ECB may decrease rates, potentially supporting the Swiss Franc.
  • 📉 Europe’s disappointing growth prospects have limited the rise of the EUR/CHF pair.
  • ⚠️ Main risk identified is central bank’s reaction to rapid CHF appreciation.

Factors Influencing EUR/CHF Pair Movement

  • 🌍 Global economy’s soft landing favors Euro, but Europe’s growth prospects limit rise
  • 📉 Stagnant economic growth in Europe and political uncertainty favor CHF over EUR
  • 📈 Lack of enthusiasm in Eurozone likely to drive EUR/CHF lower in the future
  • 🤔 UBS identifies main risk as central bank’s reaction to rapid CHF appreciation

UBS’s Forecast and Analysis

  • 💹 UBS forecasts EUR/CHF pair to decline to 0.93 in second half of 2024
  • 💼 UBS now expects EUR/CHF to grind lower, with resistance at 0.96-0.97 and support at 0.92.
  • 💰 UBS no longer advising 0.95-1.0 range for EUR/CHF, sees pair moving lower

GBP/CHF Pair Analysis and Forecast

  • 💷 Strong UK services inflation and economic data may lead to moderate BoE rate cuts
  • 🔄 UBS predicts GBP/CHF to trade around 1.11 in the coming quarters
  • 📊 Important support levels at 1.07 and 1.06, resistance at 1.15 and May highs at 1.1670

Monetary Policy Influence on Exchange Rates

  • 🏦 Contrasting monetary policy between SNB and BoE influencing exchange rates
  • ⏰ SNB near end of rate-cutting cycle, BoE just beginning easing cycle
  • 📉 Expectations for SNB to make final cut in September, BoE to reduce rates quarterly

In the world of forex trading, the EUR/CHF and GBP/CHF currency pairs are closely watched due to their potential for volatility and movement. UBS forecasts a slight decline in the EUR/CHF pair, with the Euro’s lackluster growth prospects and geopolitical uncertainties likely to drive it lower. The Swiss National Bank’s expected interest rate cut and the contrasting monetary policies between the SNB and the Bank of England are also key factors influencing the exchange rates.

On the other hand, UBS predicts the GBP/CHF pair to trade around 1.11 in the near term, with important support and resistance levels to consider. Strong UK economic data and inflation rates may lead to moderate rate cuts by the Bank of England, potentially impacting the GBP/CHF pair moving forward.

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