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Pound Sterling Swiss Franc (GBP/CHF) Exchange Rate Slumps as No-Deal Brexit Fears Rattle Sterling

Swiss Franc Currency Forecast

GBP/CHF Exchange Rate Slumps as BoE Statement Warns No-Deal Brexit Will Push up Food Prices

The Swiss consumer price index suffered a worse-than-forecast drop, from 0.2% to -0.3% in November compared to the previous month, only increasing at a rate of 0.9% compared to last November, despite a higher prediction.

The speech this morning by Governor of the Bank of England (BoE), Mark Carney may have caused movement within the Pound as he warned a no-deal Brexit would likely cause the average food shopping bill to rise by 10%.

A more orderly exit from Europe is said to bring this figure down to 6% he claimed, and noting:

‘For individual food products obviously it’s going to vary but what people will do is what everyone does, it’s that if the price of something goes up more than the price of something else, they switch products.’

The GBP/CHF exchange rate is currently slumping, sitting at a rate of SFr 1.2699.

GBP/CHF Exchange Rate Rallies This Morning as UK Should Have Ability to Stay in EU

The Pound pushed back against the major currencies this morning as a judge stated there was a possibility that the UK could remain in the European Union by unilaterally withdrawing from Article 50 without the consent of the twenty-seven other member states.

In a written statement, the European Court of Justice Advocate General, Manuel Campos Sánchez-Bordona stated that he believed that if a country decided to leave the EU, it should also have the ability to change its mind in the two-year exit process that is specified in Article 50.

Hubert Legal, chief lawyer for the European Council argued that allowing this withdrawal would create ‘endless uncertainty’ by allowing countries to announce they are exiting the EU in an attempt to secure more advantageous membership terms, before cancelling withdrawal.

GBP/CHF Exchange Rate Slumps Yesterday on Back of Positive Swiss Figures

The Pound slumped against the Swiss Franc on Monday following the release of Switzerland’s real retail sales for October, which showed an increase from -2.5% to 0.8% over the course of a year.

The Swiss broad-based SVME PMI was also released yesterday, which showed positive figures for, yet not quite as high as expected, sitting at 57.7 rather than the predicted 58.5, which is still a healthy expansion.

Despite this, the Swiss Franc was able to rally through Monday morning, before Sterling began to claw back some of its losses over the course of the afternoon.

Outlook: GBP/CHF Exchange Rate to Remain Volatile in Run Up to Parliament’s Decision on Withdrawal Agreement?

Looking at the latter half of this week’s session, the only data release for the Swiss Franc is the foreign currency reserves for September, so the movement within the GBP/CHF pairing is likely to be a result of developments within the Brexit negotiations.

The UK Markit services PMI is being released tomorrow, which could cause some movement for the Pound if the forecast suggesting the figure will increase is correct.

With the vote in Parliament over Theresa May’s EU withdrawal agreement fast approaching, movement of the UK currency is likely to be a result of Brexit-fuelled headlines as noted by Danske Bank strategist Morten Helt:

‘Until the British Parliament votes on the deal next week we are going to see a steady drum beat of Brexit headlines, which is going to keep the Pound weak.’