Pound-to-Franc Eyes Move to 1.09
- Written by: Gary Howes
Image copyright SNB
The pound's recovery against the Swiss franc still has some fuel left in the tank, although a resistance line must first be crossed.
The pound to franc exchange rate (GBP/CHF) trades at 1.0727, having rebounded 3.5% since its November lows.
Recent strength still looks to be a recovery sequence from the more significant selloff witnessed in 2025, when the exchange rate lost 6.0% in value.
GBP was put under particular pressure ahead of November's UK budget as business and consumer uncertainty rose, but the budget passed without major drama, prompting traders to close out bets against GBP.
The subsequent unwind of those bets explains a tactical recovery in GBP through year-end and into 2026. The question for GBP/CHF is how far that recovery extends.
Short-term, we're constructive: momentum signals suggest further upside is possible in the coming days and even weeks, with the pair trading above shorter-term moving averages.
There's resistance at approximately 1.0760 blocking the way, but if it is overcome the rally will extend. The pair was rejected here in December and January, making it a key level to watch.
A break through here opens the door to 1.09 at some point later in February or early March.
The first real fundamental tests for GBP come next week with the release of UK inflation and labour market data, and above-consensus readings would keep the recovery alive.
Before then, Thursday's UK GDP print for November is on tap, and economists at one economic research provider we follow think there's a good chance of this happening.
However, a soft reading would raise the odds of a February rate cut at the Bank of England which would weigh on GBP/CHF, potentially opening the door to a resumption of the broader downtrend.
Risks to the GBP in the year ahead include economic underperformance and a leadership challenge of Prime Minister Keir Starmer, leaving us wary that ultimately the multi-month downtrend will be re-engaged in Q2.