Will Switzerland’s strong economy ensure the CHF remains strong?

Swiss Franc at 5 month highs vs the Pound

The Swiss Franc continues to remain very strong compared with the Pound, and this is reflected in its value which is within 3 cents of its annual high, which was hit at the beginning of last month.

Mid-market levels are around 0.77 and the high point was just over 0.80. The highest point in recent times was in the 0.83s a few months after the UK’s Brexit vote back in 2016, and these levels are around double those of a decade ago when the Swiss Franc was under considerable pressure. Moving forward a combination of UK uncertainty owing to the Brexit situation, coupled with optimism surrounding the Swiss economy suggests to me that we could see the CHF/GBP exchange rate continue to hold its ground at the lofty heights that we’ve seen for the past 2 years.

Positive outlook for the Swiss Franc

The International Monetary Fund (IMF) this year predicted that Switzerland’s GDP will grow to 3% by the end of this year, which bucks the trend of the global economy which in many cases is slowing down. On-going concerns surrounding Brexit along with the US-China trade war and slower than expected European Union growth has resulted in lower growth expectations globally. The Swiss Franc’s reputation as a safe haven currency is growing especially now that the US is embroiled in trade wars and this along with the strong economy is pushing CHF exchange rates higher.

Property prices in Switzerland are said to have doubled since the crisis a decade ago, and exports from the country in the 2nd quarter of this year hit a quarterly record which demonstrates the health of the economy.

Unless the news out of the country takes a negative turn I expect the Pound to Swiss Franc rate to continue to be driven by Brexit related updates. The most recent update is that the UK has rejected the EU’s calls for a back-stop agreement whereby Northern Ireland would be treated differently to the rest of the UK should a deal not be agreed by the current cut off date. UK Prime Minister, Theresa May rejected the plans and this resulted in a sell-off of the Pound’s value.

If you wish to be updated in the event of a major move for GBP/CHF, do feel free to get in touch. You can send me a message using the form below and I will reply to you personally.