February 25, 2020 - Written by John Cameron
STORY LINK Pound Swiss Franc (GBP/CHF) Exchange Rate Steady, Swiss Safe-Haven Threatened by Covid-15 Fears
GBP/CHF Exchange Rate Rangebound as Coronavirus Fears Hit Switzerland
The Pound Swiss Franc (GBP/CHF) exchange rate edged higher by 0.2% today, with the pairing currently trading around 1.268Fr after CHF was hit by rising fears over the spread of coronavirus (Covid-15) in Sweden’s neighbouring country Italy.
Margaret Harris, the spokesperson for the World Health Organization, commented: ‘It would not be surprising if Switzerland did not identify people who may have the virus.’
The Federal Office of Public Health also said in its statement: ‘Switzerland is in a state of heightened vigilance.’
The Swiss Franc’s (CHF) safe-haven status has been increasingly compromised since Italy’s coronavirus outbreak, leaving many investors seeking out safer currencies like the US Dollar or the Japanese Yen.
Chairman of the Swiss National Bank (SNB) however declined to comment, saying that the coronavirus outbreak had instead increased investor appetite for the Swiss Franc.
However, investors are likely keeping a close eye on the Swiss currency now that neighbouring countries are now under threat from the spread of Covid-15.
GBP/CHF Exchange Rate Rangebound, Sterling Benefits Underperforming US Dollar
The Pound (GBP) has benefited today from a declining appetite for the US Dollar after the spread of coronavirus has begun to increase the odds of a rate cut from the US Federal Reserve next month.
Paul Meggyesi, Head of Currency Exchange at JP Morgan, commented that the pound had continued to ‘perform idiosyncratically’ with the Pound’s performing well due to its detachment from Europe’s and China’s coronavirus concerns.
Due to a quiet UK economic calendar this week, the GBP/CHF exchange rate continues to be driven by outside factors.
As investors are becoming increasingly jittery over the Covid-15 outbreak, the Pound has managed to capitalise on weakening confidence in the typically safe-haven currencies like the Swiss Franc and US Dollar.
According to ING analysts, however, the outlook for GBP is likely to darken this week:
‘A quiet week in terms of data releases is going to leave space to the other two key drivers of GBP: UK-EU trade negotiations and hints about the content of the upcoming UK budget… We suspect both will hardly come to the support of the pound, as the negotiations may enter an even more confrontational phase and the government is unlikely to endorse the market’s high fiscal hopes.’
GBP/CHF Outlook: Could CHF Rise on Improving Swiss Economic Expectations?
Swiss Franc (CHF) traders will be looking ahead to tomorrow’s release of February’s Swiss ZEW Survey of economic expectations. With the gauge forecast to increase from 8.3 to 13.6, we could see the CHF/GBP exchange rate edge higher as Switzerland’s economic outlook brightens.
The GBP/CHF exchange rate will continue to be driven by Brexit developments this week. Any further signs that the UK and the EU could part ways on a trade agreement would prove Pound-negative.
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TAGS: Pound Swiss Franc Forecasts Swiss Franc Forecasts