SNB/BOE in Focus for GBPCHF Traders

SNB Rate Hike SeenFollowing on from the FOMC tonight, traders will tomorrow turn their attention to the BOE meeting. However, ahead of that meeting, the SNB will step into the spotlight and expectations are geared towards the bank delivering a further rate hike. The Swiss government released its latest inflation outlook today and expects national CPI to hit 2.2% by year end. While down from the prior forecast of 2.3%, the projection is still above the SNB’s 0% – 2% CPI target. As such, traders are widely expecting the SNB to press ahead with a fresh hike at tomorrow’s meeting.GBPCHF Downside RisksSNB’s Jordan has been steadfast in sticking to his message that the bank stands willing to tighten as necessary. With this in mind, there are potentially some big opportunities opening up across FX markets tomorrow. Given the drop in UK inflation, the BOE might opt to pause its tightening program tomorrow or at least (along with hiking) signal that no further hikes are likely. In any case, the message is likely to be very different to that of the SNB which is expected to reaffirm its commitment to hiking as needed. As a result, GBPCHF looks vulnerable to a deeper move lower near-term.Technical ViewsGBPCHFThe market has been stuck in a very congested block of consolidation over recent months, underpinned by the 1.1076 level. However, if we see a split open up tomorrow between SNB and BOE policy, this might well drive a break of this level, turning focus to the 1.0918 level next.