The Swiss Franc has been weakening recently as global investors appear to be moving away from the safe haven of the Swiss banking system.
The US Federal Reserve have continued to increase interest rates during last year and have already hiked rates during 2018 with further rate hikes expected later on this year.
With the Swiss interest rate so low this has encouraged investors to sell the Swiss Franc in favour of the US Dollar hence the weakening over the last few weeks particularly vs the Pound.
The Swiss Franc has also hit 1.20 vs the Euro which is the same price when the Swiss bank removed the peg between the CHF and the Euro three years ago.
The currency’s drop is of concern as it has so far dropped by 2.5% vs the single currency since the start of the year.
Indeed, with the CHF typically used as a safe haven currency the Syrian issue would usually have had a strengthening effect on the Swiss Franc highlighting how poor it is performing at the moment.
With the European Central Bank due to end their QE programme towards the end of this year the Swiss National Bank has refused to confirm that it will follow suit and SNB Chairman Thomas Jordan has said that ending its own policy is not on the agenda.
Turning the focus back to what is happening in the UK the Bank of England are potentially looking to hike interest rates in the near future with strong odds that we could see a rate hike coming on 10th May when the Bank of England hold their latest monetary policy meeting.
I think we could see a rate hike and even if we don’t I think the overall tone will be that one will be coming and this is why I think we could see GBPCHF exchange rates hit above 1.40 next month.
If you would like a free quote when buying or selling Swiss Francs then contact me directly and I look forward to hearing from you.
Tom Holian [email protected]