The pound to Swiss Franc rate has now slipped below 1.25, a trend I did say I expected to take shape this month. Whilst some commentators do foresee the pound finding some strength once Article 50 is triggered I believe there is a strong likelihood that we will actually be more likely to see the pound falter. Brexit concerns are not just going to evaporate however positive the government is over what has been taking place. The overall likelihood is we will actually start to see the pound decline as we get closer to the triggering of Article 50 as investor concerns over the economic and political outlook for the UK take shape.
Most commentators believe the pound will remain at the mercy of politics and the global view of just how the UK economy is performing. This actually sits quite interestingly with the Swiss Franc which as a safe haven currency actually benefits from global political uncertainty. Despite having a lower interest rate in fact, a negative interest rate the Swiss Franc benefits from investor confidence. Investors have a high degree of faith in the independence and control the Swiss National Bank have over the Franc, holding the Swissie is seen as a hedge against uncertainty elsewhere. The Brexit is absolutely a factor which would lead to uncertainty in global politics and the global economy so it is right to expect a strong and more expensive Swiss Franc on the back of this trend.
Article 50 is likely to become more and more of a topic in the next couple of weeks. Markets are taking a more favourable view of the pending outcome and negotiations with a view to seeing the UK and any deal in a more positive light. Theresa May is absolutely going for a ‘hard Brexit’ with a view to securing what she believes will be the best deal for the UK even if it means turning hers and the UL’s back on what is perceived as a bad deal for the UK.
If you have any pending currency transfers to make buying or selling the pound and Franc then making some plans around the next few weeks is essential to take advantage of the volatility. I specialise in a personal proactive service to monitor exchange rates and help clients trade at a better price than banks and currency brokers. If you wish to learn more please email Jonathan Watson on email@example.com