Pound to Swiss Franc (GBP/CHF) Exchange Rate Falls Back from Monthly Best amid Safe Haven Demand
A brief jump in demand for the Pound (GBP) yesterday was short-lived, and in the end resilient market demand for safe haven currencies like the Swiss Franc (CHF) left investors selling the Pound Sterling to Swiss Franc (CHF) exchange rate again.
Investors were hesitant to buy safe haven currencies much last week, which made it easier for GBP/CHF to climb throughout the week.
This week though, the GBP/CHF interbank level briefly touched a monthly high of 1.32 before tumbling again and trending closer to the week’s opening levels at the time of writing on Wednesday.
A lack of fresh solid Brexit developments has left Pound movement mixed. The latest Swiss data was a little more optimistic than expected, which did help to boost the Swiss Franc’s demand as a safe haven.
Pound (GBP) Exchange Rates Lack the Drive to Sustain Notable Gains
Following the long bank holiday weekend, the Pound (GBP) briefly advanced yesterday when markets reopened.
Investors piled into Sterling on hopes that there would be some notable Brexit developments in the coming weeks, as Parliament had reconvened following an Easter recess that began on the 11th of April.
However, these Pound gains were brief and limited as, due to reports that there had been no major developments in attempts to break the deadlock on how Brexit should proceed, the Pound lacked the support needed to hold its ground.
On top of this, there were more reports claiming that UK Prime Minister Theresa May would attempt to hold another vote on her government’s Brexit plan in the coming weeks kept pressure on the Pound. The government’s Brexit plan has been blocked three times in Parliament already.
Swiss Franc (CHF) Exchange Rates Benefit from Safe Haven Demand and Economic Sentiment
While not quite as popular among safe haven investors as the US Dollar (USD) has been this week so far, higher market demand for safe havens has helped the Swiss Franc (CHF) to avoid losses versus the Pound (GBP).
As the US has re-implemented trade sanctions against major nations like India, and trade tensions between the US and EU worsen, investors have been eager to hold on to safe havens.
Safe haven currencies like the Swiss Franc are currencies that benefit in times on global market uncertainty.
On top of the safe haven demand though, the Swiss Franc benefitted slightly today from news that Switzerland’s April economic sentiment index had improved more than expected.
The figure lightened from -26.9 to -7.7, though some analysts believed it would only improve to around -18.
Pound to Swiss Franc (GBP/CHF) Exchange Rate Could See Further Losses on Safe Haven Resilience
Pound (GBP) volatility may have diminished and the currency’s potential for big movements may be limited without further Brexit developments, but a strong Swiss Franc (CHF) could still drag the Pound to Swiss Franc (GBP/CHF) exchange rate lower in the coming sessions.
Investors are unlikely to make any major moves on Sterling for the remainder of the week, unless CBI business confidence or factory stats are surprising tomorrow or on Friday.
Of course, any big Brexit developments will be influential too, though analysts do not currently expect any.
This may leave risk-sentiment as the most influential factor in GBP/CHF movement.
If investors remain hesitant to take risks, the Swiss Franc could remain appealing and GBP/CHF may be in for further losses. Further US trade tensions or signs of global economic slowdown would only deepen safe haven demand.
Overall though, the Pound to Swiss Franc (GBP/CHF) exchange rate will struggle to return to its monthly best without a fresh boost in risk-sentiment or demand for the Pound.