Pfister Sees CHF Under Pressure Through 2026, Recovery in 2027

Commerzbank's FX analyst Michael Pfister believes that the Swiss Franc (CHF) will continue to face downward pressure through 2026, driven by subdued Swiss inflation and limited intervention capacity from the Swiss National Bank (SNB). The SNB is unlikely to hike interest rates until 2027, according to market expectations. However, the ECB's expected rate hike in September will further widen the rate differential between the two central banks, putting additional downward pressure on the CHF.

The current inflation trend suggests that Swiss inflation will remain subdued in the coming months, forcing markets to gradually adjust their expectations of a rate hike by mid-2027. Pfister notes that the SNB is likely 'quite happy' to see these expectations priced out, as it would limit its options for weakening the CHF.

While the Franc may continue to struggle until year-end, Pfister expects it to recover in 2027. The EUR/CHF exchange rate is expected to stabilize at around 0.94 by the end of Q3 2027, as remaining expectations of rate hikes are priced out and the SNB's limited options become apparent.