GBP/CHF Exchange Rate Edges Higher, Irish PM Rejects Renegotiations on Brexit Backstop
The Pound Swiss Franc (GBP/CHF) exchange rate rose today, leaving the pairing trading around 1.174Fr on the interbank market.
Sterling has recovered from last week’s lows following the publication of the UK growth figures for the second quarter on Friday, which saw the UK economy contract for the first time since 2012.
Due to a quiet economic calendar today, Pound traders have been focusing on headlines surrounding Brexit.
No-deal fears have risen following comments from Ireland’s Prime Minister Leo Varadkar who said that the Irish backstop would not be renegotiated in talks with UK PM Boris Johnson in early September.
Mr Varadkar’s spokesperson said:
‘[The talks] would give both sides an opportunity to gain a better understanding of their respective positions. As has repeatedly been made clear, the withdrawal agreement and the backstop are not up for negotiation.’
CHF/GBP Exchange Rate Falls as Swiss National Bank Intervenes to Reign in Swiss Franc
Today saw the publication of the Swiss National Bank’s (CHF) Deposits figure, which rose by 2.77 billion CHF which indicates that the SNB could be stepping up its intervention on foreign exchange markets.
Analysts at Reuters commented:
‘Sight deposits held by commercial banks at the central bank – a proxy for currency interventions – had risen by 1.6 billion francs in the week ending Aug. 2 and by 1.7 billion francs the week before.’
Swiss Franc (CHF) traders are keeping a close eye on developments between the US and China this week, as fears of an erupting trade war between the two superpowers continue, with expectations lowering on an imminent trade deal.
The investment banking company Goldman Sachs Group commented on Sunday that the US-China trade war could heighten chances of a recession in the US economy.
As the Swiss Franc is a safe-haven currency, any further tensions between the two countries could benefit CHF, as traders flee risker assets and the US Dollar over increasing fears of a struggling US economy.
GBP/CHF Outlook: UK Unemployment Figures in Focus
Sterling traders will be looking ahead to tomorrow’s publication of the UK ILO unemployment rate figure for June, which are expected to hold steady at 3.8%.
Tomorrow will also see the release of the UK average earnings figure for Jun, which are forecast to improve from 3.6% to 3.8%.
Meanwhile, Swiss Franc traders will be looking ahead to Thursday’s printing of the Swiss producer and import prices figure for July.
The GBP/CHF exchange rate is likely to become increasingly volatile this week as the UK-EU negotiations over the Irish backstop show signs of breaking down, leaving Sterling traders feeling increasingly jittery over the heightened possibility of a no-deal Brexit on October 31.