GBP/CHF Exchange Rate Gains despite Positive Swiss Data
The Pound Sterling to Swiss Franc (GBP/CHF) exchange rate has appreciated by around 0.16% on Thursday. This is as a result of market anxiety surrounding the upcoming Swiss National Bank gold referendum. Positive Swiss data hasn’t been enough to overshadow concerns that a yes vote in the referendum will remove the Swiss Franc’s safe-haven status.
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The Pound Sterling to Swiss Franc exchange rate is currently trending in the region of 1.5305.
Sterling has steadily declined against the majority of its most traded currency competitors over the course of the week. This can be attributed to mounting negative sentiment towards the Bank of England after their continued dovishness regarding the outlook of monetary policy.
Wednesday’s British data printed disappointingly, which fuelled the Pound’s downtrend. Money Supply, Mortgage Approvals, Net Consumer Credit and Net Lending Securities on Dwellings all declined from the previous figures, with all but one (Net Consumer Credit) unable to meet with median market forecast figures.
As market sentiment improved and the US Dollar softened, the Swiss Franc has struggled from a lack of demand. Higher-yielding assets are far more attractive in a risk rich environment.
The Pound Sterling to Swiss Franc exchange rate has dropped to a low today of 1.5253.
Thursday’s British data has printed comparatively positively compared with Wednesday’s data, although with lower impact over wider market movement. The non-seasonally adjusted yearly Nationwide House Prices improved upon the market consensus of a drop from 9.4% to 8.5%, with the actual data only dropping to 9.0%. The seasonally adjusted month-on-month Nationwide House Prices also eclipsed the median market forecast of a monthly house price gain of 0.3%, with the actual result reaching 0.5%.
Swiss data has had little impact on the Franc with the upcoming gold referendum weighing heavily. The UBS Consumption Indicator jumped from 1.28 to 1.41, and the Leading Indicator advanced from 99.3 to 99.8, beating the forecast figure of 99.2.
‘The Nov. 30 vote, called by the right-wing Swiss People’s Party (SVP), is aimed at preventing the Swiss National Bank from offloading its gold holdings. It would also require the central bank to bring back gold parked abroad and hold at least 20 percent of its assets in gold,’ stated Reuters.
Should the referendum see a ‘yes’ vote there could be many complications for the Swiss Franc. The SNB would have to more than double their current gold reserves. Given the large amount of Euros in its FX reserves, the SNB would likely have to sell Euros to acquire the gold. The common currency would drop which could threaten the SNB’s 1.20 francs per Euro floor, therefore threatening its safe-haven status.
Pound to Swiss Franc Forecast to Advance
With anxieties building over the possibility of a yes vote to increasing the SNB gold reserves, it is very unlikely that the Swiss Franc will appreciate.