Safe Haven Demand Sends the Pound Swiss Franc (GBP/CHF) Exchange Rate Lower

Pound Sterling Swiss Franc (GBP/CHF) Exchange Rate Slips After Covid-19 Deaths in Japan

The Pound Sterling Swiss Franc (GBP/CHF) exchange rate edged lower today, leaving the pairing trading around 1.2683Fr.

The safe-haven Swiss Franc edged higher today after scientists warned Covid-19 may spread more easily than expected.

The risk-off mood amongst investors could not be calmed by a rate cut from the People’s Bank of China (PBoC).

Despite the drop in new infections in China, two elderly passengers from a cruise ship quarantined in Tokyo were the latest to die.

This caused the safe haven Japanese Yen (JPY) to slide, although other safe haven currencies such as the US Dollar (USD) and Franc have benefitted.

Commenting on this, Pepperstone’s Melbourne-based head of research, Chris Weston noted:

‘People are trying to get far away from the economic fallout that we might see from the coronavirus. You want your capital as far away from China as possible.

‘The sentiment continues to be ‘buy US assets’. Some people are saying if you want a safe-haven currency in the portfolio you have US Dollars now, over the Yen.’

Meanwhile, the Franc edged higher as Swiss industrial production rose in the final quarter of 2019.

Production rose by 1.6% in the final three months of the year. However, this was the weakest gain since Q3 2018.

Sterling (GBP) Falls despite Rebound in British Retail Sales

Thursday’s UK retail sales figures revealed that British consumers were more confident than expected in January.

Annual sales jumped by a better-than-expected 0.8%, after a rise of 0.9% in December.

Monthly sales rebounded by 0.9% after two consecutive declines in sales. The growth was mainly due to ‘moderate growth’ in food and non-food stores.

The monthly rise was also the best performance seen since March, offering the sector some support.

This also added to signs that the British economy has rebounded following December’s general election.

Some analysts have argued the end of election uncertainty drove last month’s growth. Commenting on this, Pantheon Macroeconomics’ chief UK economist, Samuel Tombs said:

‘January’s official retail sales figures confirm that the decisive general election has released the handbrake of political uncertainty on consumers’ spending. The headline number has been depressed by a huge 5.7% month-to-month drop in fuel store sales – the biggest since March 2015 – driven by a rise in fuel prices and bad weather.’

However, Sterling was left under pressure as data from the Office for National Statistics (ONS) showed that the quantity bought fell by 0.8% last month.

Pound Swiss Franc Outlook: Flash UK PMI Data in Focus

Looking ahead, the Pound (GBP) could edge lower against the Swiss Franc (CHF) following the release of UK PMI data.

If both manufacturing and service sector activity slow, and manufacturing plunges back into contraction territory, the Pound Swiss Franc (GBP/CHF) exchange rate will slide.


Millie Empson

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