The Pound has been a safe bet against the Swiss Franc recently, although the circumstances of the Pound’s broad-based rally have been concerning in nature.
The Franc has been through the mill by comparison, having to contend with continued low interest rates and a drop off in the price of a nationally important commodity.
At the beginning of this week, the Pound managed to surge against the Franc from a base start of 1.3782 to 1.4069.
Pound Gains Stem from Resurgence in Confidence for an In Vote
The Pound has been an exceptionally strong contender against the Franc and all other peers recently, with gains stemming from the fact that the ‘Remain’ campaign has seen a significant rise in the level of support shown in polling data.
The polls show how the political landscape of the EU Referendum debate has shifted in the wake of MP Jo Cox’s murder on Thursday; campaigning was suspended until Sunday, leaving voters and politicians alike time to reflect on the possibility that Cox had been attacked for her campaigning efforts for the ‘Remain’ side.
The Pound has managed to sustain its rally against peers over the course of the day, although tomorrow will be the true test of Sterling’s prolonged appeal, as a second day of historic highs is something of a rarity among global currencies.
Swiss Franc Drops after Reduced Chances of ‘Brexit’ Lower Gold Costs
The Franc has put on a poor performance lately, having slumped against the Pound and others on the falling cost of gold. Although the price of gold per 100 ounces had previously reached an almost tri-monthly high just below $1300, it has since dropped to $1283 due to gathering momentum for a ‘Remain’ vote in the Referendum.
Gold had previously risen in value due to safe haven demand drawing investors to put money into gold stocks; due to the chances of an instability-linked ‘Out’ vote falling, investors have instead been sinking their cash into Sterling in droves.
The previous week brought little positive for Franc investors, who were forced to confront the fact that the Swiss National Bank had left the interest rate at a seemingly detrimental -0.75%.
GBP/CHF Exchange Rate Forecast
For the current week, Pound Sterling/Swiss Franc exchange rate movement may occur as a result of tomorrow’s UK government borrowing stats for May, as well as the Swiss May trade balance and June ZEW economic sentiment index, which are due over Tuesday and Wednesday.
Regardless of any actual outcomes, it seems likely that the looming EU Referendum vote will have an overriding influence on the performance of the pairing up to, during and after the crucial date of June 23
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