Pound to Swiss Franc forecast: Will GBP/CHF rates fall below 1.20?

Pound to Swiss Franc forecast Will GBPCHF rates fall below 1.20?

The pound to Swiss Franc exchange rate has been on steady decline since May when it peaked at 1.3397. Since then, it has fallen to 1.2245 as Brexit uncertainties continue to weigh on sterling, with the market feeling the prospect of a no-deal Brexit has increased. The franc has also risen in value owing to its status as a safe haven currency, and the continued fears over the global economy.

Swiss Franc enjoying the benefits of its safe haven currency statue

The franc is a safe haven currency which means it will rise and fall in value, according to global attitudes to risk. When there are increased concerns relating to for example war or a global recession, the franc will rise in value. Likewise, in times of global certainty and confidence, the franc will lose value as investors seek alternative investments.

The pound has lost value against the franc owing to the uncertainty surrounding Brexit, and whilst Brexit remains unresolved it will act as a hindrance to the pound. The lack of clarity over what kind of Brexit will be pursued will likely leave the pound under pressure.

Conservative leadership contest coming to an end

Next week, we have the conclusion of the Conservative leadership contest where we might see the pound in the spotlight as Boris Johnson takes office. Boris is expected to win and his tendency to talk up no-deal is a key factor behind the weakness on the pound.

ECB monetary policy decision: How could this affect CHF exchange rates?

The pound to Swiss franc rate could also be in the spotlight with the latest ECB (European Central Bank) meeting next week where we will learn of any changes in monetary policy. The ECB are reported to be considering changes to their interest rates or their QE (Quantitative Easing) program, which could influence the euro and ‘weigh’ on GBP/CHF rates.

Historically, there has been some correlation between the EUR and CHF, with the Swiss National Bank previously seeking to manage the strength of the CHF against the euro. Also, because of the proximity geographically, and because the EU is the Swiss’ largest trading partner, we can see changes in franc rates following an ECB decision.

Clients with a position to buy or sell the Franc and an interest in GBP/CHF rates or currency exchanges, can contact our team to learn more about events ahead and what may move their rate.