– Written by
Frank Davies
STORY LINK Pound-Franc Forecast: Carry Trade Keeps GBP/CHF above 1.09
The Pound Sterling to Swiss Franc exchange rate (GBP/CHF) ended Friday near 1.0902, securing a small weekly gain after Thursday’s close at 1.0931 marked the strongest daily finish of 2026.
GBP continues to benefit from a wide interest-rate advantage over the Franc, although uncertainty surrounding further Bank of England tightening limits the case for an unchecked advance.
GBP/CHF Forecasts: BofA backs the carry trade
Bank of America believes the GBP/CHF uptrend has further to run and considers the pair one of the most attractive carry trades in the G10 currency market.
According to BofA; “No major G10 cross offers higher vol-adjusted carry.”
GBP/CHF closed at 1.0902, around 0.1% higher over the week after trading between 1.0858 and 1.0940.
The pair has gained around 1.4% since the beginning of July, with Sterling’s higher yield continuing to encourage investors to fund positions through the low-yielding Swiss currency.
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Bank of America’s quantitative signals have also turned increasingly positive for the Pound.
The bank added that the Swiss National Bank’s “increased willingness” to intervene in foreign exchange markets should restrict the Franc’s ability to strengthen materially.
Swiss inflation slowed from 0.5% to 0.4% in July, while consumer prices declined 0.1% on the month.
The subdued inflation backdrop strengthens expectations that the Swiss National Bank will leave its policy rate at 0.00% for an extended period.
Bank of America economist Chiara Angeloni commented; “Our base case remains the zero-interest-rate policy stays in place until end-2027.”
The Bank of England, in contrast, maintained Bank Rate at 3.75% last month, with three members voting for an immediate increase to 4.00%.
The vote maintains a substantial UK-Swiss interest-rate gap, although the majority found “little evidence so far” of stronger second-round inflation effects and pointed to “clear signs of underlying disinflation.”
UBS also expects the Swiss Franc to underperform higher-yielding European currencies.
According to UBS; “The Swiss franc’s perceived ‘safe-haven’ appeal has faded.”
The bank forecasts EUR/CHF at 0.93 in September and at the same level through June 2027.
It added; “We expect EURCHF to trade at or above 0.93.”
UBS considers stronger global risk appetite and greater use of the Franc as a carry-trade funding currency important downside risks for CHF.
MUFG’s most recent dedicated GBP/CHF forecast is much more bearish, however.
The bank retained a 1.02 target in May, arguing that Sterling’s yield support would eventually weaken and that the Franc could regain ground if geopolitical or energy-market risks intensified.
MUFG also warned that the UK economy remains more exposed to higher energy costs, while Swiss National Bank intervention may only slow rather than prevent Franc gains during a substantial risk-off move.
QCAM is also cautious over the broader Sterling outlook, despite improved technical and business-sentiment signals.
The firm highlighted the UK’s fiscal and external-account vulnerabilities, but commented; “We are reluctant to go short as the GBP is likely to rally quickly if global risk sentiment improves.”
Bank of America’s bullish carry argument should remain dominant while GBP/CHF holds above 1.0850.
A sustained break above the weekly high at 1.0940 would bring the psychological 1.1000 level into focus.
A deterioration in risk appetite or a sharper decline in UK rate expectations could instead push the pair below 1.0850 and towards 1.0800, although MUFG’s 1.02 target would require a much larger reversal in current Sterling and Franc trends.
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