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GBP/CHF Forecast: Pound to Swiss Franc Exchange Rate Continues to Test New Highs despite Risk-Aversion

March 30, 2021 - Written by Toni Johnson

Despite high demand for some safe haven currencies like the US Dollar (USD) this week, the British Pound to Swiss Franc (GBP/CHF) exchange rate continues to trend strongly as the Pound benefits more from the market’s mood and coronavirus pandemic speculation. Today’s Swiss data beat forecasts, but unless data continues to come in strong the Swiss Franc may lack the drive it needs to push GBP/CHF lower.

Last week saw GBP/CHF open the week at the level of 1.2893, before briefly touching on a fortnight low of 1.2787.

After floundering near lows for a while though, GBP/CHF saw a resurge as the Pound jumped higher. Ultimately, GBP/CHF closed last week at the level of 1.2953.

At the beginning of this week, GBP/CHF attempted to climb even higher and briefly touched on a high of 1.3014 - the pair’s best level in over a year since late-2019.

While GBP/CHF has struggled to hold those best levels, the pair still trends strong in the region of 1.2958 at the time of writing on Tuesday.

Pound Sterling (GBP) Exchange Rates Remain Appealing, but Strong Outlook Already Priced In

The Pound has seen weeks of broadly strong performance, as it became clearer to markets that Britain’s economy could well be one of the first major economies to recover from the coronavirus pandemic.

Britain continues to roll out coronavirus vaccines smoothly and successfully. The nation has also continued with the government’s gradual lockdown easing roadmap with no complications thus far.

Sterling has surged on economic recovery hopes and seen a little extra strength as those hopes are supported by developments and data. This is helping the Pound to hold near its best levels against the Swiss Franc today.

However, Sterling’s advances have been slowing over the past week or so, as much of the optimism around the UK outlook has been priced in and the Pound lacks fresh upside surprises for now. According to You-Na Park-Heger, Analyst at Commerzbank:

‘even if the UK emerges more quickly from the corona crisis than for example the EU a large share of the positive news is likely to be priced in already

Even though Sterling is going to be able to benefit from the projected end of the pandemic short-term, medium-term we remain sceptical about Sterling,’

Swiss Franc (CHF) Exchange Rates Remain Unappealing after Dovish SNB

The Swiss Franc has been unable to capitalise on the surge in safe haven demand seen over the past week or so.

This has been due partially to the dovish sentiment shown by the Swiss National Bank (SNB) lately, as the bank has repeatedly expressed concern with a strong Swiss Franc.

The SNB held its March policy decision last week. There were no surprises from the bank and the bank did soften its language about potential forex intervention, but the SNB still maintained a dovish stance overall.

Calling the Swiss Franc ‘highly valued’, the bank’s dovish language towards the currency combined with higher US bond yields compared to those of other nations has left investors looking to the US Dollar (USD) for safe havens.

In last week’s policy decision, SNB President Thomas Jordan said:

‘We have to continue with our expansionary monetary policy,

The economic environment has to change considerably before we can think about changing monetary policy.’

GBP/CHF Exchange Rate Forecast: Could Swiss Data Boost Franc’s Appeal?

Amid a dovish Swiss National Bank (SNB), investors have seen little reason to buy the Swiss Franc lately.

However, if upcoming key Swiss data comes in notably better than expected, it could boost speculation that the SNB could become more optimistic, and the Franc may strengthen again.

Key Swiss data due in the coming sessions includes tomorrow’s Swiss economic sentiment index report. Thursday’s data could be even more influential, with Switzerland’s March inflation results and February retail sales stats.

Stronger inflation or retail stats could boost hopes for Switzerland’s economic resilience and momentum. This could make the Franc more appealing as a safe haven again.

Of course, if tomorrow’s key UK growth rate report beats forecasts or markets become more willing to take risks again, the Pound to Swiss Franc exchange rate is more likely to hold its recent gains and trend near its best levels.
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