Pound Sterling to Swiss Franc (GBP/CHF) Exchange Rate Forecast to Dive as Franc Stabilises
The Pound Sterling to Swiss Franc (GBP/CHF) exchange rate has softened by -0.74% on Friday afternoon.
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In the immediate aftermath of the Swiss National Bank’s shock decision to remove its Euro cap, the Franc surged across the board. However, as the dust settles the Franc has declined against nearly all of its most traded currency competitors.
The Pound, meanwhile, is trending higher versus many of its major peers as the UK’s comparatively high interest rate makes it an attractive prospect for storing cash.
The Pound Sterling to Swiss Franc (GBP/CHF) exchange rate is currently trending in the region of 1.2852.
Pound Sterling (GBP) Exchange Rate Strengthens on Roiled Currency Market
In the aftermath of the SNB’s shock decision, the currency market was subject to intense volatility. This led investors to search for new assets to park their cash, and the comparatively high UK interest rate made for an attractive alternative negative rate of the SNB.
‘This is the biggest currency shocker in years and it’s likely to create more volatility in the short term,’ said James Stanton, head of foreign exchange at deVere Group. ‘Trading positions are extremely vulnerable and volume has gone through the roof.’
The Pound Sterling to Swiss Franc (GBP/CHF) exchange rate dropped to a low today of 1.2901.
Swiss Franc (CHF) Exchange Rate Fluctuates after SNB Shocker
As described above, the SNB’s decision to remove the Euro cap caused the Franc to surge across the board. ‘The decision has been a surprise for markets – you can’t do it in any other way,’ SNB President Jordan told reporters in Zurich. ‘We came to conclusion that it’s not a sustainable policy.’
Although the exact reasoning behind the decision has been argued by traders, especially given how close we are to the European Central Bank introducing quantitative easing, SNB’s Jordan stated; ‘The minimum exchange rate was introduced during a period of exceptional overvaluation of the Swiss franc and an extremely high level of uncertainty on the financial markets. This exceptional and temporary measure protected the Swiss economy from serious harm. While the Swiss Franc is still high, the overvaluation has decreased as a whole since the introduction of the minimum exchange rate. The economy was able to take advantage of this phase to adjust to the new situation.’
Pound Sterling to Swiss Franc (GBP/CHF) Exchange Rate Forecast to Fluctuate
With heightened volatility in the currency market, forecasting the Franc’s position is difficult. However, it is likely that the Pound Sterling to Swiss Franc (GBP/CHF) exchange rate will continue to fluctuate as the dust settles.
The Pound Sterling to Swiss Franc (GBP/CHF) exchange rate advanced to a high today of 1.3387.