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Pound Sterling Swiss Franc Exchange Rate Forecast: Brexit Clarity could Restore GBP Demand

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The GBP CHF exchange rate has plummeted recently on the back of Theresa May’s comments on Brexit, but could stabilise in the future if current fears are challenged in the coming weeks.

The Franc has performed well against the Pound, with a historic rise in retail sales boosting demand.

Pound Sterling Plummets after PM Statements Point Towards ‘Hard Brexit’

The Pound Swiss Franc exchange rate has had an extremely rough start to the week, with a -0.9% drop coming over the course of Monday morning.

This heavy GBP depreciation has been caused by comments made by Prime Minister Theresa May over the weekend. May, who was giving her first interview of the year to Sky news, stated that perceptions that the UK would leave the EU while keeping ‘bits’ of its membership were wrong.

This was widely interpreted as meaning that single market access was off the table, which provoked a mass market panic and shattered Sterling demand.

Meanwhile, the Franc had a much stronger start to trading, with the news that retail sales had risen in November the first time since late 2014 providing a positive open to the week.

GBP CHF Future Forecast: Clarity Needed from PM May if Pound is to Recover against Franc

As it stands, it remains ambiguous whether the Government is aiming for no single market access or continued ties with the EU after leaving, which has weakened confidence in the Pound notably.

If May issues a statement supporting single market access, or even simply clarifies what were decidedly ambiguous statements in the near-term, then the Pound may naturally recover as uncertainty lessens.

Swiss Franc Pound Exchange Rate Forecast: Gold Costs Remain in Focus Going Ahead

Looking to future sources of movement for the Swiss Franc, the price of nationally important commodity gold remains a dominant influence over Franc demand.

Fluctuations in the price of gold are linked to demand for other assets; one major alternate source of investment is the US Dollar, the value of which can be shifted by Federal Reserve interest rate hikes.

If the Fed decides to raise US interest rates three times in 2017, as they are forecast to, then demand for the USD is expected to soar, which will push gold costs further down.

In the near-term, marketplace concern from President-Elect Donald Trump taking office on January 20th may weaken the US Dollar, raising the appeal of gold and the Swiss Franc by extension.

Recent Interbank Exchange Rates

At the time of writing, the Pound Swiss Franc (GBP CHF) exchange rate was trending in the region of 1.23 and the Swiss Franc Pound (CHF GBP) exchange rate was trending in the region of 0.80.