Pound Sterling to Swiss Franc (GBP/CHF) Exchange Rate Rebounds as Risk-Sentiment Rises

Pound to Swiss Franc (GBP/CHF) Exchange Rate Traders Await Major Brexit Developments

Concerns about the lack of UK support for Prime Minister Theresa May’s Brexit plan caused the Pound Sterling to Swiss Franc (GBP/CHF) exchange rate to slide yesterday, meaning this morning’s GBP/CHF rebound was limited.

While GBP/CHF briefly advanced on Monday, the pair shed around half a cent on Tuesday. GBP/CHF rebounded this morning, but only slightly as the Pound is benefitting slightly from higher risk-sentiment.

The primary cause of Pound (GBP) losses yesterday were due to negative Brexit comments from US President Donald Trump and ex-Defence Secretary Sir Michael Fallon.

The safe haven Swiss Franc (CHF) was briefly able to capitalise on the Pound’s Tuesday weakness following news that President Trump had also threatened to ramp up US trade tariffs on China.

Despite this investors remain hopeful that there may be a trade breakthrough between the US and China at a dinner between Trump and Chinese President Xi Jinping later in the week at the G20 summit in Argentina.

Pound (GBP) Exchange Rates Struggle to Firm as Brexit Fears Persist

Sterling (GBP) edged higher against the Swiss Franc (CHF) on Wednesday morning, but its gains were modest at best amid a lack of new reasons for markets to support the British currency.

On Tuesday, US President Donald Trump claimed that the agreed UK-EU Brexit deal meant that Britain would be unable to negotiate independent trade deals, such as a potential UK-US trade deal.

While UK officials attempted to reassure that a deal could be made, Trump’s words kept pressure on the overly-sensitive Pound.

On top of this, UK ex-Defence Secretary Sir Michael Fallon, a former ally of Theresa May, said that the UK-EU Brexit deal was ‘doomed’ unless it was renegotiated.

These comments have worsened market concerns that the deal could be blocked in Parliament and may even collapse, potentially leading to a ‘no-deal’ Brexit.

Further attempts from UK Chancellor Philip Hammond to boost support for May’s Brexit plan on Wednesday morning had little notable impact on Sterling movement.

Swiss Franc (CHF) Exchange Rate Strength Limited as Hopes for US-China Breakthrough Persist

Part of the Pound to Swiss Franc (GBP/CHF) exchange rate’s recovery this morning was due to weakness in the Swiss Franc (CHF), as investors sold the currency amid rising market appetite for risk.

Demand for safe haven currencies like the Franc briefly rose on Tuesday as US President Donald Trump threatened a fresh round of trade tariffs on US imports of Chinese goods.

Despite this, other officials and analysts continued to speculate that a breakthrough in US-China trade relations could come from an upcoming dinner meeting between US President Donald Trump and Chinese President Xi Jinping.

According to Larry Kudlow, Director of President Trump’s National Economic Council, the two presidents have an opportunity to change the tone of talks if they indicate they are open to concessions.

Stephen Innes from OANDA, said Kudlow’s comments made investors more optimistic despite Trump’s recent comments:

‘As the market prepares for the dinner date of the century, regional equity investors are expressing a sense of relief that there may be light at the end of Trump’s trade war tunnel despite the ideological differences that were on full display at the Asia-Pacific Economic Cooperation summit.’

Pound to Swiss Franc (GBP/CHF) Exchange Rate Investors Await Trade Developments, Swiss Growth Stats

Unless there are some notable Brexit developments in the coming days, the Pound to Swiss Franc (GBP/CHF) exchange rate’s movement may be driven more by the Swiss Franc (CHF) than the Pound.

The anticipated meeting between US President Donald Trump and Chinese President Xi Jinping at the G20 summit in Argentina is likely to be highly influential for global risk-sentiment.

If US-China trade relations are perceived to have improved, investors will become more willing to take risks and the safe haven Swiss Franc will fall.

However, if US-China trade tensions worsen the Swiss Franc is likely to strengthen.

On top of this, key Swiss data due for publication in the coming days may further influence the Swiss Franc’s movement.

Thursday will see the publication of Switzerland’s Q3 Gross Domestic Product (GDP) growth rate results, followed by KOF leading indicators data from November on Friday.

If these figures impress investors, the Pound to Swiss Franc (GBP/CHF) exchange rate may have an even tougher time recovering in the coming sessions, even if risk-sentiment rises.

Josh Ferry Woodard

After leaving university in 2011 Josh briefly worked as a currency analyst in the South West of Cornwall. Josh continued monitoring the currency markets and publishing exchange rate analysis after moving to London in 2012, with a particular focus on the impact of economic and political stimuli on forex. Josh was a regular contributor to The Telegraph’s weekly currency feature for several years.

Contact Josh Ferry Woodard