GBP/CHF interbank rates have generally been improving over the last month and currently sit at a near 2-month, after climbing nearly 4 cents or 3% over that period. These gains have been from sterling strength but also from a fall in demand for the CHF as global tensions have been falling resulting in less demand for the currency which is traditionally seen as a ‘safe haven’ currency.
|Currency Pair||% Change (Month)||Difference on £200,000|
US-China talks, even though they have not yet produced an agreement, have been moving forward increasing hopes that a positive conclusion could be made. So much so that Shanghai stocks have climbed by 25% this year.
Domestically a confidence survey in Switzerland came out negatively this week on Tuesday. This being the KOF survey which asks a number of economists about there optimism for their economy going forward.
This morning retail figures were released which showed a small contraction. Purchase Managers index is released this morning and is expected to show an expansion.
Tomorrow Consumer confidence figures are released and are expected to show a contraction. If confirmed this may result in the CHF becoming cheaper to buy as we end the week.
Longer term there are concerns mounting that Switzerland’s largest trading partner, the EU, which is currently experiencing sluggish economic growth could impact domestic economic growth in Switzerland. Speculation has been building that the Swiss National Bank (SNB), could be willing to introduce a new round of monetary easing proactively if that risk increases. According to a recent comment from SNB President Thomas Jordan, ‘We always have the possibility of lowering rates further. We have already gone quite far, but still we've got the necessary room to maneuver, and we can, if necessary, expand the balance sheet further via interventions.’
The SNB is well known for introducing monetary stimulus and policies, if such a thing is introduced once more the value of the CHF could well fall as a result.