GBP/CHF Forecast – Have Investors Already Priced in a Rate Hike by the BoE? (Matthew Vassallo)

Sterling breaks 1.30 against the Swiss Franc

GBP/CHF rates have dipped slightly this morning, with the Pound losing value against the majority of major currencies during early morning trading.

The pair is now trading around 1.3050, having hit a high of 1.3154 earlier this week.

Whist the UK economy remains under pressure, the Pound has gained some traction over the past couple of weeks against the CHF. This is likely in part, due to investors pricing in an interest rate hike by the Bank of England (BoE) at their upcoming policy meeting next Thursday. Whilst the majority of analysts (83%) believe that the central bank will hike rates, it is worth noting that any potential rise is likely to be minimal.

Therefore, I anticipate that this will have already been priced into Sterling’s current valuation and I am not anticipating an aggressive spike, unless the bank hike rates by more than 0.25%. Personally, I am not fully convinced that we will see a rate rise and if we do it could even be less than the 0.25% figure many expect.

The Swiss National Bank (SNB) have also had a bearing on the current value of GBP/CHF, as they have for some time been trying to drive the CHF value down and this is another reason that GBP/CHF rates have moved back above 1.30.

With Brexit negotiations continuing to stagnate and no real signs of a positive breakthrough, I would be tempted to protect any Sterling positions around the current levels.

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