Pound Swiss Franc (GBP/CHF) Exchange Rate Steady as Safe-Haven Demand Eases Off

GBP/CHF Exchange Rate Rangebound as Swiss Inflation Stabilises in December

The Pound Swiss Franc (GBP/CHF) exchange rate held steady today, with the pairing currently trading around 1.277Fr after December’s Swiss inflation figure beat forecasts and rose from -0.1% to 0.2%, providing a boost for the Swiss economy at the beginning of 2020.

The Swiss Federal Statistical Office said in its statement:

‘The stability of the index compared with the previous month is the result of opposing trends that counterbalanced each other overall. Prices for hotels and mobile communication increased. In contrast, prices for products for face care and make-up and those for fruit or vegetables juices decreased.’

Meanwhile, safe-haven currencies like the Swiss Franc (CHF) are beginning to lose some of their appeal as geopolitical tensions between the US and Iran ease, with CHF falling from four-month highs against the Euro and easing against the US Dollar.

Analysts at Commerzbank, comments:

‘Since no further bad news from the Middle East followed, markets have calmed down somewhat and panic moves like in the USD or the JPY have been corrected.’

We could see the CHF/GBP exchange rate begin to ease further if tensions between Washington and Tehran, along with US and China relations, ease off. Additionally, if Beijing agrees to go ahead with a US-China Trade Deal on 15th January, we could see investors flock to riskier assets.

GBP/CHF Exchange Rate Steady, UK Markets Brace for Further Brexit Developments

The Pound (GBP) remained generally unmoved against the Swiss Franc (CHF) today as British markets await further Brexit developments, following Prime Minister Boris Johnson’s announcement that he would continue negotiations with the European Commission President, Ursula von der Leyen.

A spokesperson for the Commission commented:

‘The meeting is really to discuss holistically the U.K.’s withdrawal from the European Union and to look forward to the year ahead in all of its dimensions’.

UK Parliament will also return from its Christmas recess today, with Boris Johnson’s revamped Brexit withdrawal bill expected to face another vote, following its success in December.

With the bill expected to successfully pass through the House of Parliament, due to a comfortable Conservative majority, this has proved Pound-supportive today.

GBP/CHF Outlook: Could Sterling Face Further Volatility in the Second Phase of Brexit Talks?

Due to a lack of notable UK economic data this week, Brexit will remain firmly in the driving seat for the GBP/CHF exchange rate. We could see the Pound benefit once he Withdrawal Agreement Bill passes through Parliament, as this would effectively clear the path towards a 31st January Brexit.

The next phase of Brexit negotiations will, however, prove more difficult, with some analysts being downbeat about the near-term for Sterling. Neil Mellor, the Senior Strategist at BNY Mellon, commented:

‘There’s going to be a strain on Sterling going forward because it’s very clear that the EU doesn’t want to facilitate a competitor.’

The Swiss Franc (CHF), meanwhile, will remain sensitive to geopolitical developments around Washington and Tehran, as well as US-China relations, with any signs of a compromise between the nations easing off safe-haven demand for the Swiss currency.

David Moore

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