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British Pound to Swiss Franc Exchange Rate Sturdy Despite Higher Demand for ‘Safe Havens’

January 26, 2017 - Written by John Cameron

The British Pound to Swiss Franc exchange rate trended near its daily lows on Friday afternoon in the region of 1.2525, but still looked to sustain considerable gains throughout the week as a whole.

As trade concerns weighed down other ‘safe haven’ currencies like the US Dollar (USD) and Japanese Yen (JPY), the Swiss Franc was able to easily advance against a weakened Pound as it was bought by investors looking for safe assets.

[Previously updated 27/01/2017]

Ahead of the weekend the British Pound to Swiss Franc exchange rate returned to a downtrend, with Sterling coming under fresh pressure from Brexit jitters.

As markets also remain cautious over the protectionist rhetoric of the new US administration the appeal of safe-haven currencies has improved once again, to the benefit of the Franc.

[Previously updated 26/01/2017]

The British Pound to Swiss Franc exchange rate has edged higher this week despite markets favouring ‘safe haven’ currencies. This increased market hopes that the UK government will secure solid post-Brexit trade deals for the UK and bolstered GBP demand.

GBP/CHF began the week trending at 1.2408 but has since climbed to over 1.26. On Thursday morning, GBP/CHF hit a high of 1.2648 – its best level since the first week of January.

Pound (GBP) Supported by Better than Expected Growth Figures

Sterling continued to trend strongly on Thursday after pushing GBP/CHF higher for most of the week, largely thanks to the day’s optimistic UK ecostats.

Britain’s Q4 2016 Gross Domestic Product (GDP) figures were predicted to slip from 0.6% to 0.5% quarter-on-quarter and from 2.2% to 2.1% year-on-year. However, the results of 0.6% and 2.2% respectively indicated that UK growth was more resilient than expected.

Analysts perceived that there was little sign of any Brexit impact to the UK economy yet, offsetting some concerns that UK economic growth would be slowing heading into the beginning of the Brexit process.

Sterling also saw lingering excitement from news that the UK government was to publish a Brexit ‘white paper’ for MPs to scrutinize.

These factors kept the Pound near its best levels against the Franc on Thursday, but concerns that the UK services sector could soon slow limited its advances.

Swiss Franc (CHF) Holds Firm on Risk-Demand

While GBP/CHF has registered solid gains in recent days, the ‘safe haven’ Swiss Franc has been able to limit the Pound’s advances due to demand for safer currencies on the foreign exchange market amid Trump jitters.

The new President of the US, Donald Trump, has taken a notably protectionist stance in his first week in power.

With markets fearing the US will be cutting itself off from many key trade partners under the Trump administration, traders have rushed away from risky trade-correlated currencies and towards safe ones like the Swiss Franc.

Prices of gold have also performed well in the past week, giving additional support to the gold-correlated CHF.

GBP/CHF Forecast: Pound Likely to End Week Higher on Trade Hopes

UK markets look forward to the publication of the Brexit ‘white paper’ towards the end of the week, as well as a weekend meeting between UK Prime Minister Theresa May and US President Donald Trump.

May will be the first world leader to have met with Trump since his inauguration last week. It is expected their meeting will focus on the potential for Britain and the US to share closer trade relations following the Brexit.

Friday’s session will be light in terms of data, with no influential prints getting published from either the UK or Switzerland. As a result, it’s highly likely GBP/CHF will register gains this week.

Next week’s key events include the Bank of England’s (BoE) first policy meeting of 2017 and markets will hope for a more optimistic outlook.

Over in Switzerland, KOF leading indicators for January will be published on Monday, and Swiss consumer confidence results will come in next Friday.

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