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Pound Swiss Franc (GBP/CHF) Exchange Rate Falls as Pandemic Fears Buoy Safe Havens

Covid-19 Pandemic Fears Send Pound Sterling Swiss Franc (GBP/CHF) Exchange Rate Lower

The Pound Sterling Swiss Franc (GBP/CHF) exchange rate slumped by around -0.6%, leaving the pairing trading at around 1.2617Fr.

The safe-haven Swiss Franc was able to make some gains today as fears the coronavirus outbreak would become a pandemic increased.

A US official from the US Centers for Disease Control and Prevention (CDC) urged American citizens to prepare for the virus to spread within the country.

Another official added that it was not a ‘question of if […] but when’ the virus would become a pandemic.

Meanwhile, the outbreak in Italy, Europe’s worst-hit country has spread and France reported its first French victim of Covid-19.

The virus continued to spread through Iran, and the official death toll in the country reached 19 this morning. Iran has the highest number of deaths outside China.

According to Tatsuya Chiba, Mitsubishi Trust Bank’s manager of forex:

‘Markets had been under-estimating the risk of coronavirus but I think that phase is over by now.

‘I would think we will see the peak of fears when people become seriously worried about an epidemic in the United States.’

Yesterday: Pound (GBP) Rebounds as Markets Find Stability

The safe haven Franc is likely to make further gains if analysts continue to predict weaker global economic growth due to the virus.

Commenting on this, head of financial markets research for Asia-Pacific at Rabobank in Hong Kong, Michael Every said:

‘The base case is rapidly shifting from ‘Bad’, meaning only China is impacted, to ‘Ugly’, where both emerging Asia and developed economies see soaring infection rates and deaths.

‘Its effects will likely resemble the global financial crisis of 2008-2009 more than the SARS outbreak in 2003.’

Meanwhile, Monday saw global fears the virus could become a pandemic grow after a surge in infections outside China.

Italy, South Korea, and Iran all reported outbreaks of the coronavirus which weighed on risk appetite.

However, on Tuesday the Pound received a boost as markets found some stability. The risk-off shift yesterday caused investors to move away from the safe-haven US Dollar which had previously weighed on Sterling sentiment.

Pound Swiss Franc Outlook: Will the Safe-Haven CHF Extend Today’s Gains?

The Swiss Franc (CHF) could continue to rise against the Pound (GBP) if Covid-19 continues to spread across Europe.

If risk appetite declines further, traders are likely to rush to safe havens such as the Franc, buoying the currency.

Looking ahead to Friday, the Swiss Franc could suffer losses following the release of February’s KOF Leading Indicators.

If February’s figure slumps after January’s rebound, the Pound Swiss Franc (GBP/CHF) exchange rate will be left largely flat.