GBP/CHF Exchange Rate Falls, Swiss Franc Reaps Benefits of Safe-Haven Status
The Swiss Franc to GBP (GBP/CHF) exchange rate eased today with the pairing currently trading around 1.220Fr. The Swiss National Bank (SNB) was ominously mute, with no monetary policy signals forthcoming even after the European Central Bank (ECB) attempted to charge a flagging Eurozone economy by lowering the deposit rate.
The silent SNB has left jittery Swiss Franc (CHF) traders increasingly concerned over the prospect the central bank may introduce easing next Thursday.
Analysts at Reuters commented:
‘Further easing by the ECB heaps pressure on the SNB to relax its already ultra-expansive policy based on a negative interest rate of -0.75% and currency market interventions to reduce upward pressure on the safe-haven Swiss Franc.’
However, the Swiss Franc has risen against the Pound (GBP) as the safe-haven currency continues to benefit from growing concerns for a global recession.
In Swiss economic news, today saw the publication of August’s producer and import prices, with the year-on-year figure easing from -1.7 to -1.9, while the month-on-month figure declined by -0.2. As these are both proxies for inflationary pressure in the Swiss economy, they could inform the SNB’s monetary policy statement going forward.
GBP/CHF Exchange Rate Dips as Belfast High Court Dismisses Anti-No-Deal Brexit Legislation
The Pound failed to gain on the Swiss Franc today after Belfast’s High Court dismissed claims that a no-deal Brexit and a hard border would threaten the Northern Irish peace process. Lord Justice Bernard McCloskey said the matter was one of politics and not a legal issue.
Consequently, the threat of a no-deal Brexit continues to haunt UK markets, with the Conservative Party determined to honour the October 31 Brexit deadline and no sign the government is engaged in withdrawal negotiations with the EU.
Meanwhile, today’s publication of August’s UK RICS housing price balance failed to lift UK markets, with the figure rising from -9% to -4%.
Simon Rubinsohn, Chief Economist at RICS, was downbeat in his assessment:
‘It is hard to get away from the shadow being cast over the housing market by the seemingly never-ending Brexit saga. Indeed uncertainty is a theme that respondents continue to highlight as a negative influence on sentiment in survey after survey.’
GBP/CHF Outlook: Could the Swiss Franc Rise on a US-China Trade Flare-Up?
The Pound will continue to be driven by Brexit developments into next week with any sign of a concession from the Conservative government proving Pound-positive.
Meanwhile, Swiss Franc investors will keep a close eye on global economic developments, with US-China trade relations firmly in focus.
If tensions between the world’s two largest economies flare we could see the GBP/CHF exchange rate sink with investors capitalizing on the Swiss Franc’s safe-haven status.