Mark Carney Steadies GBP/CHF Rates on Global Viewpoint

by
Jonathan Watson
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The pound to Swiss franc exchange rate has been steadied following comments from Mark Carney during a briefing on the global economy at the Barbican centre in London yesterday. I was fortunate to be in attendance and was struck by Carney’s confident manner, although he highlighted some major risks ahead which would be key for GBP/CHF rates.

Sterling was weaker going into the talks, particularly as Theresa May has once again kicked her plans further down the road in providing a meaningful vote on Brexit by 26th February. Tomorrow in Parliament there will be fresh talks on possible amendments to the current Brexit bill which would see the pound possibly rise down the line.

Swiss Franc’s safe haven status

The Swiss Franc is seen as a barometer of global risk sentiment, it can rise and fall according to sentiments on global uncertainty. As a safe haven currency in times of uncertainty the Franc will strengthen. Mark Carney highlighted the Trade Wars and the possible knock-on effects on the global economy as a key concern for the future.

The Bank of England has conducted research which showed that for every 2% that is knocked off Chinese GDP, it will result in 1% off UK GDP and 0.5% off global economic growth. Such concerns could easily resurface in the future as investors seek safer havens from the possibility of a future weakening in the global economy.

When is the best time to buy Swiss francs with pounds?

GBP/CHF rates levels are below 1.30 and the familiar suggestion for us to buy Swiss francs with pounds when above 1.30, and sell when below, seems to still remain the sensible option. I believe that the uncertainty of a no-deal Brexit will only increase the potential for some more negative movements on the pound to Swiss franc pairing, thereby presenting increased volatility.

Today is the latest UK Inflation data and Friday Retail Sales. Overall the more negative outlook for the UK economy looks unlikely to be shaken and clients with a GBP/CHF transaction might well benefit from a review of their position ahead of looming key decisions on the outlook on Brexit.

If you’d like to discuss exchange rates or an upcoming currency exchange, please feel free to use the form below to get in touch. I’ll be happy to respond personally.

About Jonathan Watson

Jonathan has a genuine and passionate interest in the currency markets, writing on various currency blogs and websites. Outside of work he enjoys running and swimming to keep fit, and enjoys listening to all sorts of music. He is also partial to socialising with friends and fellow FCD employees! His committed and enthusiastic approach to his work is reflected in the professional yet friendly manner with which he handles his clients.

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