Market snapshot

GBP/CHF looks vulnerable in the near term as UK macro momentum fades while the Swiss franc remains underpinned by improving trade headlines and limited evidence of sustained Swiss National Bank pushback. The cross is hovering around the 1.06 handle, with Société Générale highlighting scope for downside follow-through as relative fundamentals tilt further in favour of CHF.

GBP/CHF

Société Générale argues downside momentum is building below 1.06, citing a softer UK labour backdrop and a pullback in rates. The unemployment rate rose to 5.0% in September, earlier than the Bank of England had signalled, and followed two months of deterioration after a stable mid-year patch. Employment fell by 22,000, the first decline since March 2024, while private-sector wage growth eased to 4.2% year-on-year, a development the bank frames as incrementally supportive for a less restrictive MPC stance.

Markets have responded by leaning more decisively towards a December Bank Rate cut, with pricing implying roughly 80% probability. The labour release also triggered a decline in gilt yields. Société Générale notes that a break lower in 10-year yields, historically anchored near 4.40%, could see 4.36% tested if next week’s inflation print undershoots expectations. Dovish-leaning commentary has reinforced the shift, with MPC member Megan Greene suggesting the labour market may be past its worst and describing a neutral rate range of 3.25% to 3.50% as plausible.

EUR/CHF

CHF support has also been helped by trade-related optimism, including reports that Switzerland may secure a reduction in US tariffs from 39% to 15%. Société Générale’s read is that a step-down in tariff risk would ease growth headwinds and, by extension, complicate efforts by the SNB to curb CHF strength through policy signalling alone. The bank also points to positioning and hedging dynamics suggesting less urgency to protect against a weaker franc, with the premium profile for EUR calls versus CHF puts having normalised after a sharp move since late October.

On policy, the SNB continues to face a low inflation backdrop. Recent CPI outcomes have been softer than earlier expectations, with October and November printing 0.1% and 0.0% year-on-year, respectively. While the bar for negative rates still appears high, the SNB is also unlikely to tighten quickly, leaving a bias towards verbal guidance and sporadic intervention rather than a sustained policy effort to weaken CHF.

USD/CHF

USD/CHF is trading with a soft dollar backdrop and a still resilient CHF. The Federal Reserve delivered another 25bp cut this week, taking the policy range to 3.50% to 3.75% in a split vote, while signalling a more cautious path ahead. That combination has weighed on broad USD sentiment, and Reuters notes the franc also drew support from the SNB outcome.

Spot dynamics remain consistent with that mix, with USD/CHF hovering around the 0.7950 region in recent pricing commentary. Near-term direction should stay sensitive to shifts in Fed pricing, US data momentum, and risk sentiment, while CHF continues to benefit from low inflation, a steady SNB stance at 0%, and reduced tariff uncertainty.

Looking ahead

For GBP/CHF, next week’s UK inflation data is the key near-term catalyst for rates and the cross, particularly via the 10-year gilt level flagged by Société Générale. For EUR/CHF, the balance of risks hinges on whether the ECB repricing extends into the 18 December meeting and on any improvement in the geopolitical backdrop, both of which could provide a tailwind to EUR/CHF into year-end and early 2026.