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GBP to CHF Exchange Rate Soars as ‘Biden Bounce’ Leaves Safe Havens Tumbling

November 9, 2020 - Written by James Fuller

As markets open for the week and investors react to the results of the US 2020 Presidential Election, investors have become more willing to take risks again and as a result the British Pound to Swiss Franc (GBP/CHF) exchange rate has surged. The Pound is seeing some relief from the victory of Democrat candidate Joe Biden, while the Swiss Franc is being sold as investors no longer feel the need to hold onto safe haven currencies.

Last week was a mixed week for GBP/CHF. After opening the week at the level of 1.1881, GBP/CHF spent the week fluctuating but ultimately ended the week slightly lower, at the level of 1.1840.

However, when markets opened today, GBP/CHF quickly rebounded those losses and saw even further gains. Optimistic market news and moods left the Franc tumbling, and GBP/CHF surged to trend near a high of 1.1964 at the time of writing.

This was the best level for GBP/CHF in two months, since the beginning of September.

GBP Exchange Rates Boosted by Market Sentiment, Vaccine News

Monday has turned out to be a fairly bullish news for global markets.

Investors are more willing to take risks and look optimistically on political outlooks after the results of the US 2020 Presidential Election. What’s more, a big development on a major coronavirus vaccine has further bolstered market moods.

The Pound was weighed by uncertainty last week, as the British outlook was swamped by coronavirus and Brexit worries.

However, with the US election result largely clear now, the Pound can focus more on Brexit again. Markets are generally optimistic about Brexit, so less noise in political uncertainty is a plus for the Pound.

Still, a lot of the Pound’s gains today were largely due to rival losses, such as losses in safe havens like the Franc. According to Ned Rumpeltin, European Head of Currency Strategy at TD Securities:

‘It’s keeping people mostly sidelined with respect to the Pound in the sense that there are easier things to do elsewhere,

There’s a clearer trade in say, the Aussie or Norway, dollar-CAD, for example… as opposed to getting involved in sterling where you have still an unquantifiable degree of uncertainty,’

CHF Exchange Rates Plummet as Markets Sell Safe Havens

The Swiss Franc is a safe haven currency. It is a currency which often strengthens in times of global uncertainty.

As a result, the Franc has seen resilience in recent weeks. Uncertainty over the tighter than expected US 2020 Presidential Election boosted market demand for safe havens like the Franc for much of the past week.

However, this also means that relief from the eventual outcome has led to a plummet in the Franc today.

At the weekend, analysts called the race for Democrat challenger Joe Biden. The clear result has left markets relieved, more willing to take risks again. As a result, the Swiss Franc has plummeted as investors no longer feel the need to hold onto safe haven currencies.

This movement was only exacerbated by today’s news on progress towards a coronavirus vaccine. Ned Rumpeltin at TD Securities said:

‘Clearly, the big news is of course pricing in the Biden presidency, which I think is more about pricing out risk premia than pricing Biden in,

The Pfizer news is a good thing for the world in general. If the vaccine is as safe and effective as these headlines might suggest, that might be another gamechanger,’

GBP/CHF Exchange Rate Forecast: Further Gains Possible if Markets Continue to Calm

The Pound to Swiss Franc exchange rate may be in for further gains in the coming weeks, depending on how market risk-sentiment continues to unfold.

If the US political situation continues to calm, markets are only likely to become more willing to take risks. This could mean more losses for the safe haven Swiss Franc.

As the Swiss National Bank (SNB) has recently expressed concern about the strength of the Swiss Franc, investors may be more willing to keep selling the Swiss Franc from its highs as market sentiment continues to improve.

Pound investors will be looking ahead to potential developments from UK-EU Brexit negotiations. Markets expect that some kind of deal will be reached in the coming weeks, so any news here could boost Sterling.

In terms of data, tomorrow will see the publication of Britain’s September job market report. The report could give Sterling further support if it indicates that Britain’s economy is weathering the coronavirus pandemic better than expected.

Amid a lack of notable Swiss data due this week though, the Swiss Franc is most likely to be driven by market sentiment.

If news around US politics and coronavirus vaccine efforts remain optimistic, the Pound to Swiss Franc exchange rate is likely to keep climbing.
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