GBP/CHF Exchange Rate Buoyed by Downbeat Swiss GDP
The Pound to Swiss Franc (GBP/CHF) exchange rate is trending higher again this morning, in the wake of Switzerland’s latest GDP figures.
At the time of writing the GBP/CHF exchange rate is trading at around CHF1.2129, up nearly 0.3% from this morning’s opening rate.
Swiss Franc (CHF) Dented by Record Contraction of Growth
The Swiss Franc (CHF) is trading on the back foot against the Pound (GBP) and most of its other peers today after Switzerland’s latest GDP figures revealed a dramatic collapse in growth.
According to data published by the Swiss State Secretariat for Economic Affairs (SECO), Switzerland’s economy shrank by 2.6% in the first quarter of 2020, compared with a 0.3% expansion in the final quarter of 2019.
This was the largest slump in growth since records began in 1980 and came as demand was hit severely by the coronavirus crisis.
The SECO reported:
‘Historic declines were seen in trade (-4.4%) and accommodation and food services (-23.4%), which had been struggling with falling numbers of foreign guests since back in early March.’
This has fed into a broader sell-off of the Swiss Franc this week as demand for the safe-haven currency has been trimmed by an upbeat market mood on hopes for a coronavirus vaccine and a swift recovery in the global economy.
Can Pound (GBP) Maintain Momentum in Face of Growing Brexit Risk?
While the Pound (GBP) has enjoyed some support through the first half of this week on the back of improving market sentiment, its potential to extend these gains looks limited in the face of growing Brexit risks.
The UK and EU are holding their latest round of Brexit talks this week, the final round ahead of a key summit later in the month to assess how much progress has been made towards a new trade deal.
Analysts aren’t holding out much hope for a breakthrough this week, with their still being a significant gap between the UK and EU on a number of key issues such as fisheries.
This is likely to unnerve some GBP investors as it greatly increases the risk of a no-deal Brexit, with the UK government having previously threatened to walk away from talks in June unless there is a ‘clear outline’ of a deal on the table.