Home / Forex Treiding / UBS Wealth slashes GBP/CHF forecasts but sees the pair ending the year higher than current levels

UBS Wealth slashes GBP/CHF forecasts but sees the pair ending the year higher than current levels

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UBS Global Wealth Management lowers their GBP/CHF forecasts


But not in the way you would expect. The firm sees GBP/CHF at 1.23 in three-months’ time, 1.25 in six-months’ time and 1.27 in twelve-months’ time. Their previous forecast has the pair pinned at 1.29 across the horizon.
In a client note today, the firm says that they see sterling eventually recovering as they predict the 31 October Brexit deadline will be extended followed by a UK general election.
They argue that:
“Recently, markets have overpriced no-deal risks for October. This uncertainty should fade and lift GBP/CHF. However, the air should get thin above 1.30 as Brexit risks will linger on and global uncertainties such as trade politics could support demand for CHF.”As for downside levels, they argue that 1.15 is the limit unless a no-deal Brexit materialises. They see GBP/CHF falling to 1.05-1.10 in such a scenario but also in the possibility that the SNB is unable to keep up with further easing by global central banks.
I’m not going to argue against their Brexit stance because it’s all a subjective opinion as to how things are going to play out. However, what I know from looking at the chart is that now is not the right time to be catching a falling knife.
The pound has been taking a massive beating since mid-May and hasn’t shown any signs of a reprieve – not even a dead cat bounce – until today.
Until that changes, the path of least resistance continues to point towards further downside as the risks of a no-deal Brexit outcome are still ever present.
More optimistic developments may still come by to lift the currency off the floor eventually but until we can confirm that, there is no reason to try and bet against the market trend. You’ll just end up getting washed away.

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