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GBP CHF Exchange Rate Slides after EC President Confirms Brexit ‘Divorce Bill’

March 24, 2017 - Written by James Fuller

GBP Slumps after Juncker’s “Brexit Bill” Comments

With direct UK data in short supply today, the GBP CHF exchange rate has dropped by -0.4%. This follows discouraging remarks from European Commission President Jean-Claude Juncker.

Commenting on how Brexit negotiations might proceed, Juncker stated;

‘I am [in] anything but in a hostile mood when it comes to Britain. We will negotiate in a friendly way, a fair way, and we are not naïve’.

Despite this bonhomie, however, Juncker warned that the UK would have to pay a ‘leaving bill’ that potentially costs around £52bn;

‘It will be a bill reflecting former commitments by the British government and by the British parliament. There will be no sanctions, no punishment, nothing of that kind’.

Weekly GBP Prediction: Are Heavy Losses due on Brexit Beginning?

Brexit will remain a key influencer of the Pound next week, with the actual process of leaving the EU officially starting on Wednesday.

Prime Minister Theresa May is due to activate Article 50, meaning that a heavy Pound to Franc depreciation is likely on the news.

Wednesday will also bring the GfK confidence score for March which may extend Pound losses if it falls further.

Ending next week’s UK news will be finalised Q4 GDP growth stats on Friday. Forecasts have been for a quarterly rise but an annual slowdown, so the Pound may end up falling overall on the news.

CHF Demand Steady despite Falling Gold Costs

The Franc’s gains against the Pound today have been enabled by Q4 current account data, which has shown a rise from 20.6bn to 22bn.

Commodity movement has been less helpful, with the cost of gold falling from around $1250 per 100 ounces to $1244.

This cost could spike back up in the future, if waning confidence in the US drives traders towards gold as a safehaven.

CHF Forecast for Limited Movement Next Week on Short Data Supply

The price of gold is expected to remain a relevant influencer of the Swiss Franc against the Pound next week, given the sparse data releases.

On this front, Wednesday’s main news will be the UBS bank consumption indicator.

The other major news will be Thursday’s leading indicators figure, which predicts possible future changes in the national economy.
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