Traders of Swiss Franc are closely monitoring Swiss CPI release today. Headline inflation is anticipated to increase from 1.4% yoy to 1.7% yoy in December. This expected rise aligns with SNB’s own conditional inflation forecast, which projects inflation to reaccelerate from 1.6% in Q4 of last year to 1.8% in Q1, peaking at 2.0% in Q2 before tapering off to 1.9% in Q4.
Regarding SNB’s monetary policy, current interest rate stands at 1.75%, which is comparatively unrestrictive. Unlike the more aggressive rate hikes implemented by counterparts like ECB and Fed, SNB’s past rate increases have had much less detrimental impact on the Swiss economy. Consequently, there is no immediate pressure for a rate cut, and it is generally anticipated that SNB will maintain current interest rate at least until Q3 of this year. Should today’s inflation reading surpass expectations, it could increase the likelihood of SNB holding interest rate unchanged for the remainder of the year.
GBP/CHF recovered after hitting 1.0634, being supported by falling channel support line. Price actions since there are corrective looking. Also, the recovery is kept below 1.0879 minor resistance. Thus, outlook is staying bearish. Break of 1.0746 minor support will bring retest of 1.0634 low first. Further break there will resume recent down trend to 100% projection of 1.1502 to 1.0779 from 1.1153 at 1.0430.
