Sterling/Swiss franc rates have started to climb a little recently, on Friday interbank rates visited the lowest levels seen in over 18 months on fears that the G20 meeting would result in a further heightening of global risk fears.
|Currency Pair||% Change (Month)||Difference on £200,000|
The G20 meeting was the location where the two heads of the respective largest economies met to discuss future trade, between the US and China. The meeting has been suggested to have been productive which has as a result reduced risk appetite and weakened the CHF as a result making a little cheaper to buy. Saying that however, this small upward movement could well transpire to be a small buying opportunity rather than a change in trend, as generally GBPCHF interbank exchange rates have been dropping since the beginning of May.
CHF is widely seen as a 'safe haven' currency meaning that in times of heightened tensions investors hold it and normally sell the assets in times of calm. As a result, the cost of buying the CHF has been highly influenced by the updates on the Trade war between the US and China plus also tensions with Iran. Many of the worries investors have had since 2018 have not gone away and the outlook for trade remains highly uncertain.
The US imposed further sanctions on Iran recently with Iran responding by saying that it sees this as the end of diplomacy with them and the US. Iran has now also breached the amount of enriched Uranium which it had previously agreed to which many expect to only bring further escalation in tensions. As a result, the cost of oil has also risen to over $67 a barrel, up by over 20% compared to the beginning of the year. As swings in tension levels continue most expect this to continue to impact the value of buying CHF.
Domestically within Switzerland, there is perhaps some respite for clients looking to buy CHF. On Thursday Consumer Price Index (CPI) is released and expected to show a contraction which in turn could weaken the CHF's value making it cheaper to buy. However, global events could take centre stage and could well result in the CHF being more expensive to buy once more.
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