• USD/CHF declines as the Swiss Franc appreciates against the US Dollar. 
• An upwards revision to Swiss economic growth forecasts supports CHF. 
• Uncertainty about whether the SNB will cut interest rates on Thursday further supports the Franc. 

USD/CHF trades in the 0.8870s on Tuesday, around a quarter of a percent lower on the day, after the release of Swiss government data showed an upwards revision to growth forecasts in 2024. Further, a lack of progress on inflation brings into doubt an expected interest-rate cut from the Swiss National Bank (SNB) at its meeting on Thursday. 

The Gross Domestic Product (GDP) growth rate in Switzerland is forecast to reach 1.2% in 2024 – up from the 1.1% predicted in March – according to figures released by the State Secretariat for Economic Affairs (SECO), on Monday. The GDP growth rate in 2025, meanwhile, is expected to be 1.7%, unchanged from the March estimate.

Consumer prices are forecast to rise by an annual 1.4% in 2024, a downward revision from the 1.5% in March, according to SECO, and in line with the Swiss Statistical Office’s Consumer Price Index (CPI) reading of 1.4% in May.

Despite the downward revision to inflation in the SECO report, the market consensus is that inflation is not making sufficient progress lower to warrant a cut in interest rates by the Swiss National Bank (SNB) on Thursday. 

The May CPI reading showed no change from April’s 1.4% and as a result of this lack of progress on inflation, investors dramatically revised down their expectations of the SNB cutting interest rates at the June meeting. From a probability of 80% prior to the release of May CPI, the probability fell to roughly 50% after, according to Trading Economics. Since lower interest rates are generally negative for a currency, the decline in probabilities led to a strengthening of CHF (decline in USD/CHF).