UBS and CFA Society Switzerland released data on 30 July 2025 showing an improvement in sentiment. The UBS investor sentiment index for July increased to +2.4 from the previous -2.1.
Most analysts do not anticipate further rate cuts by the Swiss National Bank (SNB). The improved sentiment is also aided by a stronger economic outlook. This marks the first occurrence since February that the index has risen above zero.
Investor Sentiment Turns Positive
Investor sentiment in Switzerland has turned positive for the first time since February, a significant shift for us to watch. The market consensus is that the Swiss National Bank (SNB) will not be cutting interest rates any further this year. This change in rate expectations is a primary driver for the improved outlook.
Looking back, we saw the SNB take the lead among central banks with its rate cuts in March and June of 2024, which contributed to a weaker franc. That period now appears to be over, with the focus shifting towards economic stability and a pause in monetary easing. This policy pivot is crucial for positioning in Swiss assets.
The improving economic forecast is supported by recent statistics. For instance, the State Secretariat for Economic Affairs (SECO) recently upgraded its 2025 GDP growth forecast to 1.5%, and the latest manufacturing PMI has held above the expansionary 51.0 mark. This suggests traders should consider bullish strategies on Swiss equities, such as buying call options on the Swiss Market Index (SMI).
Strengthening Swiss Franc
This new outlook should strengthen the Swiss franc (CHF). We are already seeing the EUR/CHF pair retreat from its highs of around 0.98, now testing lower levels. This trend supports derivative strategies that profit from a rising franc, like purchasing puts on the EUR/CHF or calls on the CHF/USD.
Implied volatility on franc options might still be relatively low given the recent period of negative sentiment. This could offer a cost-effective window to establish long positions on the currency. The current environment makes it attractive to bet on franc appreciation over the coming weeks.
