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Pound to Swiss Franc (GBP/CHF) Exchange Rate Falls as Safe-Haven Demand Returns Amid Global Economic Woes

June 9, 2020 - Written by John Cameron

GBP/CHF Exchange Rate Sinks as Swiss Franc Buoyed By Safe-Haven Demand

The Pound to Swiss Franc (GBP/CHF) exchange rate fell by -0.9% today, as the Swiss currency has benefited from a resurgence in safe-haven demand today as uncertainty grows over the health of the global economy.

The Swiss Franc (CHF) has also benefited from a fall in US stock markets. Investors are becoming increasingly worried about the state of the world economy as the coronavirus pandemic continues to weigh on China and the US, the world’s two largest economies.

Edward Moya, senior market analyst at OANDA, commented:

‘Despite the historic rally in the stock market, there's a an enormous amount of risk out there to the outlook.’

‘As the economy reopens fully, there's going to be a surge, but I don't think that's going to be long lasting. There are concerns that risk assets are near their peak and we're probably going to see a little period of consolidation.’

In Swiss economic data, today saw Switzerland’s unemployment rate beat forecasts by rising to 3.4%, despite estimates of a 3.7% increase.

Pound (GBP) Falls as Post-Brexit Fears and Gloomy Jobs Outlook Weigh Down Sterling

The Pound (GBP) edged fell today despite that the UK would be engaging in post-Brexit trade talks with Japan, Britain’s fourth-largest non-EU trade partner. However, with UK-EU trade relations till uncertain, investors are remaining cautious on growing fears of a no-deal in December.

Meanwhile, last night saw the release of the UK’s BRC retail sales report, which failed to impress at just 7.9%. Consequently, GBP investors are becoming doubtful whether Britain’s retail sector will stage a significant return to growth over the coming months.

Helen Dickinson, the BRC’s chief executive said:

‘Nonetheless, as the sun came out and restaurants lay dormant, food sales rose with consumers taking to their local parks for beers, BBQs and picnics. Clothing and beauty sales improved slightly on April, as people left their homes to meet outside with friends and family.’

The UK’s jobs outlook has always weighed on the GBP/CHF exchange rate today, with the ManpowerGroup survey painting a picture that is its gloomiest in nearly 30 years.

GBP/CHF Outlook: Could Easing UK Lockdown Restrictions Boost the Pound?

Pound (GBP) traders will be looking ahead to tomorrow’s release of the UK’s RICS Housing Price Balance figure for May. Any signs of improvement could lend GBP some support.

However, the Swiss Franc (CHF) will likely continue to be driven by risk sentiment this week. As a result, the GBP/CHF exchange rate could suffer as safe-haven currencies continue to benefit from a faltering global economy in the wake of the Covid-19 crisis.

The GBP/CHF could claw back some of its gains, however, if Downing Street announces any further measures to ease the nation’s coronavirus lockdown measures.

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