Pound Sterling Swiss Franc (GBP/CHF) Exchange Rate Rallies as BoE Overshadows Risk Aversion
The Pound Sterling Swiss Franc (GBP/CHF) exchange rate rose for the second day, leaving the pairing trading at around 1.2728Fr.
Earlier in the week, the Swiss Franc made significant gains as fears surrounding the spread of the Wuhan coronavirus send investors towards safe haven currencies.
On Thursday, the new strain of coronavirus was declared a global health emergency by the World Health Organization (WHO).
This provided safe havens with further support, and WHO chief Tedros Adhanom Ghebreyesus noted:
‘The main reason for this declaration is not what is happening in China but what is happening in other countries.’
Reports have revealed that at least 213 people in China have died, and there are close to 10,000 cases across the country.
WHO also stated that there have been around 98 cases in 18 other countries, but no reported deaths. The virus also reached the UK on Friday, with two cases reported.
However, despite the risk-off mood continuing, the Swiss Franc was unable to rise against Sterling which had been buoyed by the Bank of England’s (BoE) interest rate decision.
Swiss Franc (CHF) Slumps as Retail Sales Inch Higher
This morning, data showed that Swiss retail sales inched up by 0.1% in December, the weakest annual gain since August.
This below forecast data followed November’s figure was upwardly revised from 0% to 0.5%.
However, Sterling continued to benefit from yesterday’s Bank of England (BoE) interest rate decision, rising against the Franc.
Sterling (GBP) Jumps as BoE Leave Rates on Hold
The Pound continued its rally on Friday after the Bank of England (BoE) left interest rates on hold during Governor Mark Carney’s final rate decision.
While the bank left rates on hold, policymakers also left the door open to policy easing in the future.
Following the decision, Governor Carney said that recent data suggested that UK growth could improve. However, he added:
‘To be clear these are still early days and it’s less of a case of so far so good than so far good enough.
‘Although the global economy looks to be recovering, caution is warranted. Evidence of a pick-up in growth is not yet widespread.’
Meanwhile, just before the decision GBP made significant gains which has prompted the bank to ask the Financial Conduct Authority (FCA) to investigate.
Pound Swiss Franc Outlook: Will GBP Extend Gains Next Week?
Looking ahead, Sterling (GBP) could make further gains against the Swiss Franc (CHF) following the UK’s departure from the European Union.
After 47 years as a member of the EU, the UK is set to leave at 23:00 GMT today. If this provides markets with an upswing of Brexit optimism, the Pound will continue to rise.
Meanwhile, the Franc could slump on Monday following the release of SVME’s PMI data.
If the Swiss PMI measure slumps further than expected below 50, the Pound Swiss Franc (GBP/CHF) exchange rate will continue to make gains next week.