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GBP/CHF Exchange Rate Forecast: UK Election Uncertainty to Lead to Heightened Volatility in the Coming Weeks?

GBP/CHF Exchange Rate Steady as Early UK Election Confirmed

The Pound Swiss Franc (GBP/CHF) exchange rate is rangebound this morning as markets digest UK parliament’s decision to trigger a snap election before Christmas.

At the time of writing the GBP/CHF exchange rate is trading at around CHF1.2731, virtually unchanged from this morning’s opening levels.

Pound (GBP) Faces Significant Election Uncertainty

The Pound (GBP) is facing down the threat of significant volatility in the coming weeks as the UK gears up for its third general election in five years.

Parliament voted on Tuesday to hold a general election on 12 December, with Boris Johnson selling it as the only way to break the current deadlock over Brexit.

However many political observers are unconvinced, and are forecasting that the upcoming election could prove just as inconclusive as the last.

While current polls show a clear 10 point lead for the Conservatives most investors will remember a similar showing ahead of the 2017 election which ended with Theresa May losing her majority in Parliament.

Analysts also warn the focus on Brexit will also result in a breakdown in traditional voting lines, with many constituencies potentially switching hands due to the ideological differences over Brexit.  

With the result of the election almost impossible to predict and the risks of a hung parliament appearing high, Sterling is likely to find itself vulnerable to some weakness in the weeks to come.

Swiss Franc (CHF) to be Buoyed by US-China Trade Deal Delay?

Meanwhile, any upside potential in the Swiss Franc (CHF) remains tied to US-China trade developments.

In recent weeks a flurry of positive headlines surrounding US-China trade talks has greatly diminished demand for the safe-haven Franc.

US President Donald Trump has been a key factor of this, having frequently played up the chances of a ‘phase 1’ trade deal being signed by himself and Chinese counterpart Xi Jinping when they meet at the Asia-Pacific Economic Cooperation Summit in Chile next month.

However recent reports suggest the preliminary deal would be ready in time for the summit, which should it prove true could curtail the recent risk-on mood and see investors flock back to the Swiss Franc.