Pound to Swiss Franc (GBP/CHF) Exchange Rate Higher on ‘No’ Vote Victory
The Pound to Swiss Franc (GBP/CHF) exchange rate has been trending higher on Thursday and is presently residing at 1.5345. This session the Pound has seen highs of up to 1.5381 and lows of 1.5242.
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The Pound was initially expected to be highly volatile on Thursday as the Scottish referendum takes place. However, market tensions have eased as expectations for the outcome of the vote have fallen in favour of the United Kingdom staying together. The final poll by Ipsos Mori suggested that 47% of voters were in favour of ‘Yes’ to independence, giving the lead to the ‘No’ camp.
Furthermore, as the referendum has been shrouded in such heated debate, the police have been situated outside of polling stations during voting. Over 97% of Scottish residents are registered to take part in the vote, estimated at approximately 4.2 million people.
Meanwhile, the Swiss Franc has been affected by the Swiss National Bank’s (SNB) policy review, which also took place on Thursday. The ‘Swissie’ is tied to the Euro and the SNB has announced it intends to keep the minimum exchange rate at the present 1.20 Swiss Francs per Euro benchmark. Furthermore, it also kept the three-month Libor (short-term interest rates) in the ongoing low 0.0-0.25% region.
The SNB stated that the outlook for the Swiss economy has seriously deteriorated, adding that the domestic currency is still higher than it should be.
The central bank continued; ‘With the three-month Libor close to zero, the minimum exchange rate remains the key instrument to avoid an undesirable tightening of monetary policy. The SNB will therefore continue to enforce the minimum exchange rate with utmost determination. For this purpose, it is prepared to purchase foreign currency in unlimited quantities. If necessary, it will take further measures immediately.’
Weak price growth is still a prominent issue with inflation in Switzerland standing at just 0.1%, in contrast to the bank’s 2% inflation target. The SNB will keep deflationary threats in mind; in accordance with its assertion that it will take action ‘immediately’ if matters escalate and have the potential to hinder economic growth. A strong Swiss currency could restrain economic expansion and today’s quarterly review suggests the SNB is not afraid to apply new measures to maintain the current exchange rate.
For now, Pound to Swiss Franc exchange rate movement will remain dependent on the outcome of the Scottish referendum. However, the backlash of the event still remains to be seen, with debate on both sides becoming heated. Some politicians are voicing concerns about the offer of a devolved parliament made to Scotland if they remain in the UK. Friday will see the result of the vote, which could send ripples through the markets.
The Pound Sterling to Swiss Franc exchange rate is currently trending in the region of 1.5412.
With trader anxieties having abated after the Scottish citizens elected to remain unionised with the United Kingdom; Sterling has gained across the board. The ‘No’ vote won by 55.3% which is perhaps much closer than most were expecting.
With an absence of British data on Friday Sterling is likely to continue to gain, or hold, against the majority of its most traded currency peers.
The Swiss Franc, meanwhile, is likely to trend lower against the majority of its competitors after the Swiss National Bank stated that the outlook for the Swiss economy has deteriorated considerably.