Improvement Forecast For Swiss Franc CHF Versus Pound Sterling (currency:GBP)

November 13, 2014 - Written by John Cameron

STORY LINK Improvement Forecast For Swiss Franc CHF Versus Pound Sterling (currency:GBP)

Neil Jones of Mizuho Bank summed up the Pound Sterling’s problems of yesterday when he described the bank of England’s latest Quarterly Inflation Report as being ‘more dovish than the market had expected’.

The missive’s observation that the pace of UK price rises could dip below 1.0% during the next six months came as an unanticipated piece of bad news, as was the BoE’s downward alteration to its previous forecast for the rate of British Gross Domestic Product growth for this year.

The Pound to Swiss Franc exchange rate today is converting -0.64 per cent lower at 1.51541 GBP/CHF.
The Pound to Euro exchange rate converts -0.61 per cent lower at 1 GBP is 1.26090 EUR.
The Pound to US Dollar exchange rate is -0.18 pct lower with a conversion rate of 1 GBP equals 1.57413 USD.
The Euro to Swiss Franc exchange rate today is converting -0.03 per cent lower at 1.20185 EUR/CHF.

Pound Euro Exchange Rate Slumps

The Pound Sterling euro exchange rate GBP EUR slumped by around 1.5c from its intraday high of 1.2814 on the session; however Jones does not envisage an end to GBP EUR’s extant uptrend just yet. He went on to predict that, ‘expectations for interest rate increases are being pushed back and with it the Pound is being sold. My view is that given the euro area and Japan are embarking on further stimulus, I still see sterling strength versus euro.’

Franc-Holders Await Referendum

Meanwhile, the Swiss Franc (currency:CHF) has outperformed the Pound during recent sessions thanks to the upcoming Swiss Referendum which will see the local population vote on the Swiss National Bank’s gold reserves. The popular ballot has the potential to make it harder for the SNB’s policymakers to enforce the minimum floor of 1.2000 for the EUR/CHF exchange rate which they introduced some 3 ½ years ago.

Swiss Franc Exchange Rate Strength Not Guaranteed

Ian Stannard of Morgan Stanley explained that the referendum ‘is a risk factor on the horizon and is getting some market attention. But I think we need to put all that into context. Even if it were to pass, the actual implementation could be quite a few years away, by which time the SNB may have moved away from this policy. I would not expect it to impact on the SNB’s ability to maintain the floor - they have earned their credibility.’ If Stannard’s words come to pass., then the Pound Sterling could record renewed gains against the Swiss Franc following the vote, which is scheduled for the 30th November.

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