The Pound Sterling to Swiss Franc (GBP/CHF) exchange rate rallied by around 0.42% on Tuesday morning.
Although British sales data failed to meet with the median market forecast, the Pound advanced versus many of its major peers. This can be attributed to expectations that quantitative easing in the Eurozone will be beneficial for the British economy.
The Swiss Franc, meanwhile, softened versus many of its most traded currency rivals as a result of seasonally-adjusted unemployment rising. Additional losses are as a result of dwindling sentiment towards the Swiss National Bank after they flirted with cutting the negative interest rate further.
The Pound Sterling to Swiss Franc (GBP/CHF) exchange rate is currently trending in the region of 1.4983.
Yesterday…
The Pound Sterling to Swiss Franc (GBP/CHF) exchange rate appreciated by around 0.37% on Monday morning.
After the European Central Bank (ECB) launched quantitative easing in the Eurozone, the Pound strengthened amid hopes that an improving economy in Britain’s largest trading partner will be beneficial for the UK. Additional gains can be attributed to falling business costs for the first time since 2009.
The Swiss Franc, meanwhile, softened versus many of its major competitors as the Swiss National Bank (SNB) stated that the negative interest rate of -0.75% has room to fall further if necessary.
The Pound Sterling to Swiss Franc (GBP/CHF) exchange rate is currently trending in the region of 1.4870.
Pound Sterling (GBP) Exchange Rate Ticks Higher as Business Costs Fall
In accordance with BDO, UK businesses are seeing overall cost deflation for the first time in 6-years. The falling business costs have been attributed to low oil prices which have halved since June of last year.
Peter Hemington, partner, BDO said, ‘Spending on infrastructure is one of the most effective ways to push the economy back toward full employment and keep the recovery on track. Government debt is cheaper than it’s ever been, and now, with falling raw material costs, there is a fantastic opportunity for increased public sector investment.’
The Pound also gained after the ECB launched QE after many investors questioned the institute’s ability to source the bonds required to finance the operation. Should the ECB’s program of quantitative easing aid economic recovery within the Eurozone, the UK will benefit from improved trade.
The Pound Sterling to Swiss Franc (GBP/CHF) exchange rate dropped to a low of 1.4814.
Swiss Franc (CHF) Exchange Rate Softens on Potential SNB Intervention
With the Swiss National Bank struggling against a high valued Franc for a long period, the shock removal of the Euro cap has seen the Swiss asset steadily decline. However, the declination has not been as steep as the SNB was hoping, and there is now talk of cutting the negative cash rate further in order to soften the Franc.
‘There’s clearly a limit to the negative rate — the question is exactly where it is,’ President Thomas Jordan told Swiss radio SRF in an interview broadcast Saturday. ‘At the current level of minus 75 basis points, the limit surely isn’t reached.’
Citing sources close to the SNB, Schweiz am Sonntag said ‘a rate of minus 1.5 percent is being considered.’
Pound Sterling to Swiss Franc (GBP/CHF) Exchange Rate Forecast to Hold Gains
Given the lack of domestic data to curb the trend, the Pound Sterling to Swiss Franc (GBP/CHF) exchange rate is likely to hold gains for the remainder of Monday’s trade. Tuesday may see heightened GBP/CHF volatility with Swiss labour market data due for publication.
The Pound Sterling to Swiss Franc (GBP/CHF) exchange rate climbed to a high of 1.4884 today.
