GBP/CHF – The Franc’s Safe Haven Status is a Mixed Blessing for Swiss Economy

GBP/CHF - The Franc's Safe Haven Status is a Mixed Blessing for Swiss Economy

The Pound’s value has tumbled against the CHF over the past month, losing almost 5 cents at its recent low.

GBP/CHF have levelled out slightly over the past few days, with the pair currently trading just under 1.27.

The Pound has been under pressure for some time with investors shying away from Sterling, as on-going concerns over Brexit continue to handicap any major advances.

If recent media reports are to be believed, then there is seemingly an increasing chance of a no-deal scenario with the EU. If this does occur then it is likely to send shock waves through the market and the Pound could well lose further value as a result. How much is anyone’s guess but it is unlikely to be a straightforward scenario solve and as such, the uncertainty it will bring could heap significant pressure on GBP for a prolonged period.

This in theory could strengthen the CHF’s positon further, a scenario that becomes more likely when you look at the current health of the Swiss economy. However, being such a safe haven status is a mixed blessing for the Swiss economy. When global risk appetite is low, the Swiss Franc is always considered a desirable asset. However, as money floods into the CHF and its value rises, exporters suffer and tourist businesses lose competitiveness.

This is one of the reasons the Swiss National Bank (SNB) remain keen to keep the CHF’s value in check, for fear of a repeat of the 2015 crisis when the CHF value soared against the Euro, thus causing exports to wilt.

Looking at the current trend though, it seems unlikely that the Pound will make any inroads towards or above 1.30 over the coming days, as investors risk appetite for GBP is likely to remain minimal for the foreseeable future.

For more information on the CHF and its position in times of global uncertainty, feel free to get in touch with me directly using mtv@currencies.co.uk.