EUR/CHF likely to consolidate in near-term, to move towards 1.16 – Lloyds Bank

The euro has appreciated noticeably in the past month against the Swiss franc, briefly rallying above 1.15, its highest level since the Swiss National Bank’s abandonment of the peg in January of 2015, noted Lloyds Bank in a research report. Several factors have added to this. Firstly, consistently solid euro area economic data, lowered expectations of additional easing from the ECB and the subsidence of European political risks have stimulated the euro.

Secondly, positive investor confidence has seen a reduction in ‘safe haven’ flows, lowering the demand for Swiss franc. And lastly, possible foreign exchange intervention from the Swiss National Bank might have accelerated the depreciation of the Swiss franc. The EUR/CHF pair is expected to consolidate in the near term, before continuing on its upward trajectory, said Lloyds Bank. This is likely to be driven by probable ongoing SNB intervention, which might continue until the central bank sees the franc as more appropriately valued.

“Overall, we expect EUR/CHF to move towards 1.16”, added Lloyds Bank.

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