Pound Falls against Swiss Franc (GBP/CHF) as General Election Fears Dampen Currency

March 17, 2015 - Written by Ben Hughes

STORY LINK Pound Falls against Swiss Franc (GBP/CHF) as General Election Fears Dampen Currency

The Pound slipped against the Swiss Franc on Tuesday as general election uncertainty dominated the UK currency. In the months leading up to May, the Pound is expected to soften as the prospect of a political shakeup takes hold. If no party wins the vote with a majority, the fate of UK politics could be unsteady. Controversial political party UKIP won two seats in parliament last year—a development which caused heavy uncertainty for the election. Furthermore, it’s expected that UK growth could be stunted as a result of political change. Current Prime Minister David Cameron has suggested he’d like to stay on as an MP if he doesn’t win the PM position in May. He stated: ‘It’s the country’s choice. If they hoof me out and go for the other guy, I’ll have to think of something else, but I hope I’ll still be a Member of Parliament. I love serving my constituents. I love politics. I love public service. It’s what I care about. It’s a vocation.’

Meanwhile, the Swiss Franc was offered little support on Monday when Swiss Retail Sales fell to -0.3% in January from +1.9%. In addition, Swiss Producer and Import Prices also slipped, noting a decline of -1.4% on the month in February, enough to pull the annual figure down to -3.6% from -2.7%. Another item of concern for the Swiss economy at the minute is the strong Franc after the Swiss National Bank removed the peg between the Euro and the Swiss currency. Economist Roland Klaeger commented: ‘The first quarter of this year surely will be hit sharply by the strong Franc.’

With Swiss data printing more negatively than expected, the high Swiss Franc is perhaps causing more concern amongst investors for the export reliant country. One of Switzerland’s largest supermarkets, Coop, has made the decision to stop selling certain magazines such as German language Vogue and some Disney comics as distributors fail to cut the price of them since the Franc appreciated. The supermarket has marked over 10,000 items down in price since the Franc gained and suggested that foreign suppliers complied to allow customers to feel the benefit. However, some distributors failed to cut prices and therefore will be ceasing sales altogether. Coop Vice Chairman stated: ‘Our customers do not accept this with good reason. With the sales ban, Coop wants to set an example that we will not tolerate this any longer.’

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