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Pound to Swiss Franc Today: GBP/CHF Falls as Strength Continues after SNB Decision

January 20, 2015 - Written by Tim Boyer

The Pound depreciated against the Swiss Franc on Tuesday in a continuation of last week’s Swiss National Bank announcement which saw the central bank remove its 1.20 tie from the Euro. The central bank caused turmoil in the market as the Swiss Franc rose up against other majors by over 30%. Investors took the surprise movement as a sign that the European Central Bank will implement monetary stimulus at its next meeting. Industry expert John Stoltzfus stated: ‘We believe the SNB’s action last week will ultimately be seen in the rearview mirror of market history as simply part of a process that came ahead of the launch of “QE ECB style”. For now, we believe investors should remain focused on their goals and objectives, not losing sight of them even as more surprises likely lie ahead.’

However, many companies have felt the effect of the SNB surprise with some businesses going under and there may be further repercussions to come. Currency expert Michiyoshi Kato commented: ‘The headlines come at a time when market participants still don’t know to what extent the impact of the Swiss Franc is spreading. Headlines were popping up, and investors responded (by selling), but then moved to cover their short positions. It looks this is not something that will have a lasting effect.’

Meanwhile, the Pound managed to record gains against other currency majors as investors prepared for an influential day on Wednesday. The UK Unemployment Rate is expected to fall from 6.0% to 5.9% in the three months through November—an event that could support the Pound. In addition, Bank of England meeting minutes will also surface and could influence Pound trading dramatically if more than two members voted for an increase in interest rates. The Pound, like the Swiss Franc, has also gained against the Euro ahead of Thursday’s European Central Bank announcement which is expected to see the central bank take on quantitative easing. Strategist John Hardy stated: ‘The main interest has been the big Euro-Sterling drop and to what degree was it aggravated by the SNB walking away from the Euro-Swiss floor.’

As well as the influential UK data, Swiss Money Supply and ZEW’s Expectations Survey will also be published and could lend more power to the Swiss Franc if favourable. Both UK Public Finances and Public Sector Net Borrowing ecostats are scheduled for release on Thursday in what will be a quiet day for data for the Swiss economy.

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