Attention is on two key central bank decisions today, SNB and BoE.
SNB kicks off at 7:30 GMT and is widely expected to deliver a 25bps rate cut, bringing the policy rate back to 0.00%. Speculation about a return to negative rates has intensified after Swiss CPI dipped into deflation at -0.1% yoy in May. While Chair Martin Schlegel has downplayed the importance of a single data point, he has remained open to using negative rates again if disinflation proves persistent.
The Swiss central bank faces a complicated backdrop. A stronger Swiss Franc—driven by haven flows amid the global trade war, Middle East conflict, and lingering Russia-Ukraine war—has intensified deflation risks. Euro’s strength on the back of expected fiscal expansion in Germany and the EU has provided some breathing room. Still, deflation pressures remain elevated. SNB is likely to signal readiness to act further, whether through rate cuts or FX intervention, should inflation remain subdued.
Later in the day, BoE takes the stage at 11:00 GMT. The Bank is expected to keep its policy rate unchanged at 4.25%, with Governor Andrew Bailey maintaining a message of “gradual and cautious” easing. While recent economic data—including GDP and labor market indicators—have disappointed, BoE faces added complexity from surging oil prices driven by geopolitical tensions. The central bank may be wary of loosening policy too quickly under such volatile global conditions.
Internal divisions remain a key story at the BoE. In May, the vote was notably split: five members favored a 25bps cut, two wanted a larger 50bps move, and two preferred holding. Today’s voting breakdown will give a clearer view of where consensus is forming. While a Reuters poll suggests most economists expect cuts in August and again in Q4, much will depend on how services inflation evolves and whether external shocks abate.
Technically, GBP/CHF’s decline from 1.1200 is still in progress. Deeper fall is in favor as long as 1.1059 resistance holds. Next target is 61.8% retracement of 1.0610 to 1.1200 at 1.0835.
Considering GBP/CHF was rejected by 55 W EMA as seen in the weekly chart, firm break of 1.0835 would argue that fall from 1.1675 is ready to resume through 1.0610 low.
