Swiss Franc Outlook: Pound Gains versus Franc (GBP/CHF) as Swiss Money Supply Slows

April 21, 2015 - Written by Tim Boyer

STORY LINK Swiss Franc Outlook: Pound Gains versus Franc (GBP/CHF) as Swiss Money Supply Slows

GBP/CHF Advances Despite UK Election Concerns

The Pound climbed against the Swiss Franc after the Swiss Money Supply figure declined in March. The annual ecostat came in at 2.2% after the previous month’s 2.3% increase. However, the strong Franc has been playing havoc with many businesses and now banks have said they’re facing problems with Franc mortgages from borrowers in Eastern Europe. Experts have suggested that there may be thousands or perhaps hundreds of thousands of mortgage recipients that may default on their loan repayments. Therefore the Swiss government is urging banks to help borrowers in higher-risk countries such as Croatia and Poland.

One Polish bank executive stated: ‘The political calendar is merciless, and this is why politicians are raising the Swiss Franc issue. They say what people want to hear.’

Some citizens in Eastern European nations took out their house loans in Francs as the Swiss currency is a safe-haven asset and therefore more reliable than local currencies, usually. However, the SNB cap removal caused chaos and still the aftermath is being felt. The Franc may experience some movement in the second half of the week with the Swiss Expectations Survey due for release on Wednesday. Thursday will continue on with the data stream with Swiss Trade Balance, Imports and Exports figures revealed.

Hung Parliament Could Drive Pound Sterling (GBP) Exchange Rate Lower

Meanwhile, the Pound is extremely sensitive to any developments in the UK general election at the moment as investors try to anticipate the possibility of a hung parliament or messy political aftermath. Tuesday saw more political debate occur and the heated topic of the NHS arise. The Labour party who has been in close second to the Conservatives in recent polls have tried to win over voters by stating it plans to increase trainee nurses by 1,000 this year if it gets voted in. However, the Conservative party has argued that it gained a nurse crisis from Labour’s last run of power when it took over control.

A Conservative spokesperson said: ‘We have turned that round with record high nurse numbers on our wards and a new focus on compassionate care.’

The Pound is expected to soften in coming weeks on the prospect of a major political shakeup and around the time of the general election it’s likely that currency movements will become more extreme. However, the UK currency’s exchange rate may experience some fluctuations on Wednesday with the release of the Bank of England’s latest meeting minutes.

The GBP/CHF exchange rate was trading in the region of 1.4250

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