Pound–Franc Eyes 1.0450 Retest in Q1

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The Swiss franc is reasserting its dominance.

The pound is trending lower against the franc again following a failed attempt to break higher against the low-yielding currency.

GBP/CHF peaked at 1.0798 on January 14, a move that brought the pair into contact with a descending 200-day moving average that has defined the broader downtrend.

That high marked the end of a 4.20% rally from the November low at 1.0363, a rebound that largely unfolded in sympathy with pound sterling’s post-budget recovery.

Since that rally ran out of steam, price action across most pound crosses has turned lower, with GBP/CHF reflecting a broader pattern of underperformance against currencies perceived as defensive.

The pullback has gathered pace following the rejection at the 200-day moving average, reinforcing the view that longer-term sellers remain in control.

Near-term momentum has also deteriorated, with spot now trading below the nine-day moving average, which has rolled over and is pointing lower.

This combination of long-term resistance holding firm and short-term momentum turning down increases the probability of a deeper retracement.

As a result, conditions appear aligned for a retest of the 1.0450 support level later in the first quarter.

The Swiss franc continues to draw underlying support from Switzerland’s low inflation environment and steady policy stance.

This helps insulate the currency from fears of monetary debasement elsewhere.

Currency debasement fears refer to concerns that aggressive fiscal spending, rising debt levels, or looser monetary policy could erode the real value of money over time.

This is a particular concern regarding the dollar in 2025-2026.

Currencies backed by stable inflation, conservative policy frameworks, and strong external balances tend to benefit when such concerns rise, as investors seek to preserve value rather than maximise yield.

That dynamic leaves the franc well positioned to outperform if global markets remain sensitive to inflation risks and policy credibility, keeping pressure on GBP/CHF into the remainder of the quarter.