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- GBP/CHF to continue falling as downtrend remains in force.

- Momentum firmly favours the bears in the GBP/CHF market.

- Politics to drive the GBP as CHF takes cue from risk appetite.

The Pound weakened at the start of the new week and the Franc was a little higher, leaving the GBP/CHF rate with a downward bias that is likely to remain in place over the coming days.

GBP/CHF is trading at 1.2675 at the time of writing after falling from 1.2751 at the start of the week. The Franc is higher, perhaps a little surprisingly given that global risk appetite improved following the G20 summit at the weekend.

Charts show the pair is in a short-term downtrend that will probably remain in place. As the old adage goes, the trend is your ‘friend’ until the bend at the end.

Above: Pound-to-Swiss-Franc rate shown at daily intervals.

The break below October's lows was a key moment and has increased the bearish potential on the chart. From here there is a likelihood of a continuation down to a target of 1.2600 initially, followed by the August lows at 1.2475.

Momentum firmly favours the bears at the moment, from a technical perspective at least. On the fundamental front, Swiss retail sales saw a boost in October.

Data released Monday showed a 1.9% monthly rise, up from a -1.6% contraction back in September. Sales were also 0.8% higher than one year ago.

November's IHS Markit manufacturing PMI for the UK surprised on the upside, rising to 53.1 from 51.1 previously. But the Pound failed to rally against the Euro despite the result, although it did gain marginally against the Dollar.

IHS Markit says trends in output and new orders strengthened during the month but that new export orders decreased for the second month running.

"The November PMI provided a lacklustre picture of the UK manufacturing sector, as ongoing global trade tensions and Brexit uncertainty weighed on current business conditions and dampened the outlook for the year ahead,” says Rob Dobson, a director at IHS Markit.

The key release in the week ahead for the Franc is Swiss inflation data for November, which is due out on Tuesday at 08.15 GMT. Inflation is forecast to fall -0.1% compared to the month before, and a 1.0% rise compared to a year ago.

These are both below the previous results of 0.2% and 1.1% respectively, suggesting consumer price pressures are weakening. This would be negative for the currency.

Lower inflation is likely to pressure to Swiss National Bank (SNB) to keep its official interest rate at a negative all-time low of -0.75%. This could weigh on the Franc, which is already under pressure given an upswing in global risk appetite.

The Pound is likely to see continued losses on negative Brexit fears as it becomes increasingly likely Theresa May’s deal will fail to get the approval of Parliament when MPs come to vote on it on December 11.

If the deal fails to win enough votes May could be forced to resign. There may then be a general election and even a second referendum.

In the long-term Sterling could recover if there is a benign Brexit, which most analysts still say is the most likely scenario. The risk of a 'no-deal’ or ‘remain’ outcome have also increased, although few actually expect a ‘no-deal’.

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