I heard this word for the first time in this news item when a little girl pronounced it rhyming with 'clutch'. After her Dad died a company made a cuddle bear or 'memory bear' out of Dad's clothes for her.
When she 'cwtches' the bear, she is reminded of the way her father hugged her.
The word comes from Welsh and cwtchclothing.co.uk explain on their website that a 'cwtch' is not just a cuddle or hug, there is a background context of protection from the big wide world and its daunting nature. The Welsh word, transliterated into English (for English has no exact equivalent) means more than the physical act. It denotes the protective nature of the person performing the act.
The OED merely says it it is a cuddle or hug and the OED states that the word rhymes with 'butch'. The OED describes the word as 'Welsh English'.
So the OED disagrees with the spoken example of the little girl on the news item.
Can anyone tell me how properly to pronounce it ?