Bank of America (BofA) reiterated its positive outlook for the British pound against the Swiss franc (expecting a rise towards 1.20 by mid-2025). The company’s forecast remains unchanged and highlights a bullish stance on the currency pair over the next two years.
The BofA’s optimism comes despite the impending UK Consumer Price Index (CPI) data and the currency pair approaching the upper limit of the ratio call spread, a type of options strategy used in trading. The BofA’s position is influenced by several factors that are expected to support the GBP’s strength against the CHF.
According to BofA, policy differences and secular bullishness for the GBP, in addition to the relative insulation of the UK services economy from potential global trade challenges, are key elements supporting the positive forecast. The UK services sector is an important part of the UK economy and is seen as less vulnerable to international trade disruptions.
Furthermore, the BofA suggests that UK fiscal policy, which is expected to be less restrictive, could serve as a buffer against economic shocks. This fiscal approach is expected to contribute to the resilience of the GBP and its potential appreciation against the CHF.
In conclusion, BofA’s analysis indicates that a combination of supportive economic policies and the strong UK services sector are likely to push the GBP/CHF exchange rate higher by mid-2025.
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