Swiss Franc: GBP/CHF Exchange Rate Ends @ 1.28 Despite Rise In Swiss Foreign Currency Reserves

Published: 20 Oct 2017 21:24 Forex

British pound to swiss franc exchange rate forecast

The GBP to CHF exchange rate has emerged from a three-week-low since Tuesday evening, as investors readjusted ahead of the Bank of England’s latest UK policy decision.

GBP/CHF headed back towards the week’s opening levels on Friday afternoon, as a rush in appeal of risky currencies and the Franc’s ‘safe-haven’ rival the US Dollar caused the Franc to flounder.

As a result, a particularly weak Sterling was able to capitalise, with GBP/CHF edging up throughout the afternoon and treading water around the key level of 1.28.

Despite a rise in Swiss foreign currency reserves the CHF exchange rates weakened on Friday morning, largely thanks to the still-heightened atmosphere of market risk appetite.

Although the Halifax House Price Index fell short of forecast in July the Pound to Franc exchange rate trended higher, recovering some of its losses seen in the wake of the BoE’s policy meeting.

The Swiss Franc was able to continue to capitalise on a weak Pound throughout Thursday as a press conference from Bank of England (BoE) Governor Mark Carney failed to improve investors’ hopes for the British economy.

Carney’s dire forecast included a lowered growth outlook, worse unemployment over the next two years, and the possibility of more rate cuts in the future. Carney also failed to completely rule out the possibility of negative rates, instead merely saying that he wasn’t ‘a fan’ of the idea.

The GBP/CHF exchange rate sunk to a three-week-low of 1.2748 on Tuesday amid news that the UK’s economic activity had contracted more than expected in July. However, since then the pair climbed around two rappen before Thursday’s BoE announcement. Following the announcement, GBP/CHF plunged to almost as low as 1.28.

GBP to CHF exchange rate chart

Latest Pound/Swiss Franc exchange rates:

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foreign exchange rates
On Thursday the Pound to British Pound exchange rate (GBP/GBP) converts at 1

The live inter-bank GBP-GBP spot rate is quoted as 1 today.

The GBP to EUR exchange rate converts at 1.17 today.

Today finds the pound to us dollar spot exchange rate priced at 1.262.

Please note: the FX rates above, updated 28th Mar 2024, will have a commission applied by your typical high street bank. Currency brokers specialise in these type of foreign currency transactions and can save you up to 5% on international payments compared to the banks.

Pound (GBP) Plummets as BoE Cuts UK Rates to Record Low

Sterling remained sturdy in the run up to Thursday’s highly anticipated Bank of England (BoE) ‘Super Thursday’, despite Markit’s final July PMIs revealing that activity in the UK’s private sectors had contracted worse-than-expected in July. Composite PMI came in at a low 47.5, its fastest shrink since 2009.

After slipping right up until Tuesday, the Pound began to climb as investors readjusted on the Pound, buying up short positions with the expectation that Sterling will drop to an already largely priced-in low.

Markets were widely expecting the BoE to introduce a rate cut, with most analysts believing that recent PMIs gave officials ample reason to introduce easing policy.

However, following the bank’s decision to cut the key UK interest rate to a new record low of 0.25%, as well as other stimulus measures including corporate bond purchases and a new asset purchase programme, the Pound plummeted across the board.

The decision to cut rates was unanimous, likely influenced by recent UK ecostats. 8 Monetary Policy Committee (MPC) members voted on the new corporate bond purchase changes, and the vote on asset purchases was 6-3.

Swiss Franc (CHF) Weakens as Data Fails to Impress

The Swiss Franc has fallen relatively limp in recent days, and a lack of solid Swiss data has made it difficult for the currency to hold its ground, allowing the Pound to gain on it until Thursday.

The Bank of Japan (BoJ) announced its latest stimulus package recently, which was surprisingly small causing markets to rush into the Japanese Yen (JPY).

This undermined the strength of other ‘safe-haven’ currencies like the Franc earlier in the week. A drop in gold prices has also dented the appeal of the Franc.

Tuesday’s session saw the release of real Swiss retail sales figures, which worsened from -1.7% to a surprisingly low -3.9% despite markets expecting a more modest drop to -2.0%.

SVME’s purchasing manager’s index also disappointed, slipping from 51.5 to 50.1, dangerously close to the 50 point that separates growth from contraction.

Most recently, news that Swiss consumer confidence remained at -15 offered little boost to the Franc. While markets expected a slip to -16, this result was hardly optimistic.

swiss franc to pound sterling exchange rate chart

GBP/CHF Forecast: Pound Unlikely to Recover Short-Term Following BoE Rate Cut

Sterling’s losses could be minimised later on in the session as investors continue to adjust after the BoE’s historic decision to cut UK rates to 0.25%.

However, the currency is likely to remain heavily pressured as many analysts believe the bank could introduce further cuts in coming months and investors will continue to be disappointed by Britain’s dire ecostats.

The Franc, on the other hand, could strengthen going forward as the Japanese Yen’s market-demanding rally has cooled, meaning other ‘safe-haven’ currencies like the Franc and US Dollar will be able to find more solid footing once more.

Economic calendars will be quiet now until next week, leaving GBP/CHF to move in response to the BoE’s decision throughout Friday.

Next Monday sees the release of July’s Swiss consumer price index (CPI) report, followed by Swiss unemployment on Tuesday. The first British ecostat of the week will be an update to the trade deficit on Tuesday.

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