The Pound to Swiss Franc exchange rate soared on Tuesday due to fresh hopes that UK MPs would fight for some kind of access to the European Union’s single market following a Brexit. While the Franc remained sturdy itself, it was unable to hold a bullish Sterling at bay and GBP/CHF was able to advance by around a rappen to over 1.21.
Pound (GBP) Holds Tuesday Highs Thanks to Decent Employment Stats
The Pound soared on Tuesday as markets responded optimistically to statements made by a lawyer representing the government in Britain’s High Court. He stated that it was ‘very likely’ that MPs would be able to vote on the final terms of a Brexit deal before it is passed into law once the Brexit process is complete.
Sterling has recently been undermined by comments from Prime Minister Theresa May that MPs would have no say on the activation of Article 50 or the stance the government should take in Brexit negotiations.
This news has increased hope among investors that MPs will be able to fight for a Brexit deal that leaves Britain with access to the European Union’s single market, or a similar trade deal.
Sterling was able to hold its ground on these gains on Wednesday morning, partially thanks to the latest UK employment results. According to the latest report, Britain’s employment level was at 74.5% between June and August, a joint-record-high.
Swiss Franc (CHF) Kept Sturdy Thanks to Increases in Gold Price
While Sterling was able to hold its ground near its Tuesday highs, the Swiss Franc was able to keep it from advancing further on Wednesday. The Franc even pressured GBP slightly lower thank to increased demand for gold.
As the Franc is commonly correlated with gold, the Franc has struggled in recent weeks as gold prices have been weakened by a bullish US Dollar.
However, gold prices have strengthened again this week as the ‘Greenback’ Dollar’s bullish run fades, allowing the Franc to strengthen.
Otherwise, a lack of data and mixed demand for ‘safe haven’ currencies this week have left the Franc limp, making it difficult for the currency to retake its Tuesday losses against Sterling.
GBP/CHF Forecast: Sterling to End Week Higher if Demand for Risk Remains
Tuesday’s Brexit news was just what Sterling needed to begin a stronger trend. The British currency could find solid footing near its current levels towards the end of the week if more UK data prints optimistically.
Thursday’s session will see the publication of Britain’s September retail sales scores, while the latest public sector net borrowing score will be published on Friday. If these beat expectations, they could help Sterling hold its current highs.
However, speculation that the Pound is becoming increasingly resistant to economic data and is moving increasingly exclusively on political and Brexit news could mean its advance potential is limited.
As for the Franc, the Swiss currency could sturdy if Thursday’s Switzerland trade surplus score impresses. However, so long as markets continue to indulge in riskier currencies, the Swiss Franc may struggle to recover against this week’s GBP/CHF gains.