The Pound Sterling to Swiss Franc (GBP/CHF) exchange rate has been trading within a narrow range on Wednesday after the Swiss National Bank (SNB) boosted their foreign currency reserves sharply in December.
The SNB has stated on numerous occasions that it will go to great lengths to protect the cap on the Euro to Swiss Franc (EUR/CHF) exchange rate.
Swiss Foreign Reserves Jump as SNB Attempt to Exert Control on Swiss Franc Exchange Rate
Swiss Foreign Currency Reserves rose to 495.1B in December from the former 462.7B.
December saw a substantial amount of pressure build up on the Swiss Franc’s cap, causing concern amongst some economists. One factor that pushed the ‘Swissie’ higher was the plummeting Russian Ruble (RUB) amid geopolitical uncertainty.
Economist Evelyn Herrmann commented: ‘Geopolitical tensions, in particular the situation in Russia, were cited by the central bank as the main reason for increased safe-haven flows into the currency.’
Furthermore, the Swiss National Bank has suggested that the cap against the Euro is ‘absolutely central’ for inflation figures in the year ahead.
SNB head Thomas Jordan stated: ‘We do have very low inflation and are forecasting negative inflation for 2015, which is why the cap is absolutely central.’
However, the Eurozone is suffering from instability, both economically and politically. The possible exodus of Greece from the currency bloc could spell disaster for the Eurozone, despite the German government boldly stating the Eurozone and the Euro could handle the loss.
When asked about the possible implications of a Greek departure, Jordan continued: ‘We don’t think this will happen and it’s not in our base scenario, but we shouldn’t underestimate the risk, should it come to an exit, that this would have.’
Pound Sterling to Swiss Franc (GBP/CHF) Exchange Rate Forecast
Meanwhile, the UK is experiencing a quiet data day on Wednesday, leaving Sterling movement in the hands of global developments. However, with the Bank of England (BoE) due to release its latest interest rate decision on Thursday, the Pound Sterling to Swiss Franc (GBP/CHF) exchange rate could be in for some hefty fluctuations in the coming days.
The Pound was little changed after the BoE published its formerly private protocol for the actions taken between 2007 and 2009—a time in which the global financial crisis was at its peak.
BoE Governor Mark Carney said: ‘The financial crisis was a turning point in the Bank’s history. The minutes provide further insight into the Bank’s actions during this exceptional period – the policies implemented to mitigate the crisis, the lessons that were learned, and how the Bank changed as a result.’
Governor Mark Carney has previously voiced his commitment to offering greater transparency between the central bank and the public.
Friday will be an influential day for the Pound Sterling to Swiss Franc (GBP/CHF) exchange rate with the release of Swiss Unemployment Rate figures. Current forecasts expect the seasonally adjusted figure to remain at 3.1%.
The Pound Sterling to Swiss Franc (GBP/CHF) exchange rate is presently trending in the region of 1.5312. The Swiss Franc to Pound Sterling (CHF/GBP) exchange rate resides at 0.6537.
