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Exchange Rate Forecasts for British Pound Sterling, Swiss Franc and Indian Rupee

February 23, 2015 - Written by John Cameron

The Swiss Franc (currency:CHF) has endured a roller coaster ride against the Pound Sterling since the Swiss National Bank (SNB) shocked the markets by announcing that it was scrapping the minimum floor of 1.2000 on the EUR CHF exchange rate with immediate effect last month. The news was accompanied by the revelation by the SNB that it was set to cut its key interest rate into uncharted territory. The downward move to -0.75% in the cost of borrowing was barely reported by news outlets at the time due to the dramatic effect which the ending of the EUR CHF floor had on the relative value of the Swiss currency and the Pound Sterling Franc exchange rate plunged into the 1.1100s on the day as investors rushed to buy back into Franc-denominated assets.

However, the five weeks which have followed have brought a steady weakening of the Swiss unit against the other major global tenders. The move has sent the Pound Sterling Swiss Franc exchange rate up to a fresh 5-week high of 1.4625 GBP CHF today, bringing the pair up to within 10c of the level it was trading at on the morning that the SNB made its fateful January announcement. The shift out of the Swiss tender on the day today has been accentuated by increased investor sentiment following last Friday’s announcement that Greece’s new leaders had agreed in principal a 4-month extension to their nation’s bailout loan. The Franc had been acting as a safe haven for investors seeking to shelter their funds from a potential implosion of the eurozone following a Greek exit.

Elsewhere, the Indian Rupee (currency:INR) has endured a mini sell-off on the day as investors shift out of Rupee assets ahead of Saturday’s full-year budget. The financial statement will be the first for the Nation’s (relatively) new leader Narendra Modi and investors are nervous that it may follow the pattern set by Finance Minister Arun Jaitley’s interim statement of last year in disappointing the markets. Near-term gains are forecast for GBP INR as a result.
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