Pound to Swiss Franc (GBP/CHF) Exchange Rate sofens as Russian Sanctions Increase Safe Haven Demand

The Pound (GBP) was softer against the majority of its most traded peers on Thursday as Wednesday’s disappointing wage growth data knocked sentiment towards the UK currency. The Swiss Franc (CHF) however made gains against most of its peers as demand for safe haven currencies rose after the US imposed new sanctions on Russia.

Market sentiment was knocked on Thursday after the West imposed a new round of harsher sanctions against Russia, a move that supported demand for the safe haven currencies of the Swiss Franc and Japanese Yen (JPY).

Investors grew concerned as this latest round of penalties against Moscow is likely to further damage between the West and Russia. Fears are growing that the impacts could negatively affect the wider global economy.

The new sanctions come as heavy fighting continues in the east of Ukraine between the pro-Western government forces and pro-Russian separatist rebels. According to Ukrainian officials 11 government soldiers died in the space of 24 hours.

The number of casualties among pro-Russian separatists was not immediately known.

More than 1,000 civilians and combatants have been killed since mid-April, when Ukrainian security forces moved to regain control of the eastern regions, while tens of thousands of people have fled their homes.

The sanctions target some of Russia’s biggest companies and caused the Russian Ruble to slide sharply against most of its major peers. Economists now expect the Russian economy to slide into recession. It remains to be seen whether they will have any effect on the conflict in Ukraine.

“These sanctions are significant, but they are also targeted, designed to have maximum impact on Russia while limiting any spill over effects on American companies or those who are allies,’ said US President, Barack Obama.

The Swiss Franc also firmed against the Euro (EUR) after data released from the Eurozone added to concerns that the 18-member currency bloc’s economy is stalling. According to data construction output across the region tumbled by 1.5% in May and inflation remained well within the European Central Bank’s (ECB) danger zone.