The Pound Sterling to Swiss Franc (GBP/CHF) exchange rate faltered on Thursday following the Swiss National Bank’s (SNB’s) interest rate announcement.
Although some industry experts had expected the central bank to take steps to weaken the Franc (which has been climbing steadily against the Euro), the SNB refrained from taking an action – a step which pushed the Swiss currency higher against the Pound and US Dollar.
The Franc also reached a one-week high against the Euro.
The SNB left the interest rate target unaltered, defying expectations for the deposit rates to be cut to negative.
The Euro/Swiss Franc floor was left at 1.20.
However, the central bank did assert that it was prepared to intervene in the currency market if it should prove necessary.
In its statement the SNB commented; ‘The economic outlook has deteriorated considerably. The Swiss Franc is still high. With the three-month Libor close to zero, the minimum exchange rate remains the key instrument to avoid an undesirable tightening of monetary conditions. 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.’
The Pound Sterling to Swiss Franc (GBP/CHF) hit a high of 1.5364
Although the US Dollar had been supported during the North American session by the Federal Reserve’s revision to interest rate expectations, the US Dollar to Swiss Franc exchange rate fell to a low of 0.9361 after the SNB announcement.
A separate report marked a sharp narrowing in Switzerland’s trade surplus as exports fell and imports climbed.
The surplus narrowed from 3.9 billion to 1.398 billion. Economists had forecast a surplus of 2.322 billion.
Exports dropped by -0.7% in August on a month-on-month basis in August following a positively revised gain of 0.3% in July. Imports were up a whopping 6.4% following a decline of -9.0% the previous month.
The GBP/CHF exchange rate held on to declines following the publication of the UK’s retail sales figures for August.
Sales were up 0.4% on the year, slightly better than the increase of 0.3% forecast by economists.
The year-on-year sales gain of 3.9% defied expectations for an annual increase of 4.8%.
Pound Sterling to Swiss Franc Exchange Rate Forecast
With the highly anticipated Scottish referendum taking place today, the GBP/CHF exchange rate could experience volatility.
Any further movement in the USD/CHF exchange rate is likely to be caused by the US jobless claims reports.
There is little in the way of Swiss data scheduled for publication for the rest of the week, but global developments may well have an impact on the appeal of the European currency.
The Pound Sterling to Swiss Franc exchange rate is currently trending in the region of 1.5296.
UPDATE
After declining yesterday in response to the Swiss National Bank’s policy announcement, the Pound to Swiss Franc exchange rate recovered over 0.32% on the back of the unionists successful campaigning.
Weeks of uncertainty ended in Scotland voting against independence, and the Pound accordingly advanced against almost all of its peers.
Unless there are any unforeseen developments in the hours ahead, Sterling strength is likely to persist into the weekend.
