US stock futures steady after Wall St gains on rate cut bets; PPI inflation on tap
UBS highlighted significant shifts in fiscal policy within Europe and Germany, which are anticipated to positively influence the region’s economic dynamics. The Swiss National Bank (SNB) is expected to implement a 25 basis points rate cut on March 20.
However, recent developments, including the Swiss franc’s weakening and Europe’s accelerating recovery, have cast doubt on the likelihood of further monetary easing.
According to UBS, the EUR/CHF exchange rate forecasts have been revised upward across the entire projection horizon, now expecting the rate to reach 0.95 between the second quarter of 2025 and the first quarter of 2026. This adjustment reflects a more optimistic outlook for the Euro in relation to the Swiss franc.
On the other hand, the EUR/GBP pair experienced a notable rally, almost 2%, following the announcement by the incoming German Chancellor of a major fiscal spending package, which spurred enthusiasm for the Eurozone’s economic prospects.
In contrast, UBS suggests that U.S. tariffs present a more significant risk to the Euro than to the British pound. The firm believes that markets have not adequately factored in the associated risk premium, and as a result, the EUR/GBP could see a decline in April.
UBS also notes that with the Bank of England (BoE) likely to maintain its current position in the upcoming week, the carry trade will continue to support the British pound for some time.
However, the United Kingdom (TADAWUL:4280)’s stagflationary outlook is identified as a potential risk. Despite these factors, UBS expects the EUR/GBP pair to remain broadly stable around the current level of 0.84.
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