EUR/CHF to remain well supported amid widening ECB/SNB policy divergence – CIBC

Widening policy rate differential with ECB suggests CHF weakness ahead, according to economists at CIBC Capital Markets.

SNB to be less activist than ECB 

“Although we expect additional SNB pro-activity, we expect the bank to be less activist than its ECB counterpart.”

“Narrowing growth differentials add to the presumption widening ECB/SNB policy divergence. Policy differential ended 2022 at 100 bps, we would expect that to widen to 150 bps by the end of Q1. Such policy widening points towards EUR/CHF remaining well supported.”

“Q1 2023: 0.99 | Q2 2023: 1.00 (EUR/CHF)”