UBS Raises EUR/CHF Forecast Amid Changes in European Monetary Policy

UBS emphasized that significant changes in financial policy in Europe and Germany are expected to positively influence the region's economic dynamics. The Swiss National Bank (SNB) is anticipated to implement a 25 basis point interest rate cut on March 20. However, recent developments, such as the depreciation of the Swiss franc and the acceleration of Europe’s recovery, have raised doubts about the likelihood of further monetary easing.

According to UBS, forecasts for the EUR/CHF exchange rate have been revised upward for the entire projection period, with expectations for the rate to reach 0.95 between the second quarter of 2025 and the first quarter of 2026. This adjustment reflects a more optimistic outlook for the euro against the Swiss franc. Meanwhile, the EUR/GBP rate recorded a significant rise of about 2% following the announcement of a substantial fiscal spending package by the incoming German Chancellor, enhancing economic optimism in the Eurozone. Conversely, UBS suggests that US tariffs pose a greater risk to the euro compared to the British pound, predicting potential declines in the EUR/GBP rate in April. UBS also notes that the Bank of England's (BoE) decision to maintain its current stance will continue to support the British pound for some time, although the UK's stagflationary outlook is identified as a potential risk. Despite these factors, UBS expects the EUR/GBP rate to remain generally stable around the current level of 0.84.