With the currency markets moving every two seconds, it can be vitally important to be aware of what is driving the currencies in or out of your favour. The below table shows the difference in CHF you would have achieved when buying £200,000 during the past month.
|Currency Pair||% Change||Difference on £200,000|
Following the updated tensions with North Korea the CHF has becoming significantly more expensive. Risk aversion has quickly become the primary motivator for markets at the moment after President Trump turned up the rhetorical heat on North Korea yesterday.
GBPCHF has moved by over 1.5% within the last 48 hours as global investors move funds into the CHF spiking its demand and making it more valuable. This movement means that a £200,000 transfer now secures nearly CHF 3,500 less in the last on Wednesday, again highlighting how important it is to notify your broker here of your exposure.
Generally, the GBPCHF has been trending negatively for a long time as the concerns about the UK continue to drive money out of the Pound. GBPCHF has fallen by nearly 3% in the last week and I expect this to continue moving forward. Any gains I would see as a short term opportunity rather than a long term gain.
The strain of the safe haven status for the Swiss National Bank (SNB) seems to be growing. The demand for the CHF helps Swiss business internationally however the SNB are constantly trying to keep control of the value of their currency. They do this by literally printing money and investing it abroad to try to equal the demand and settle its own currencies price.
Their spending is significant and now means that the SNB is estimated to own about $80 billion in US stocks making them the 8 largest global holder, they also hold over €20 billion in Europe. So if you have exposure to the CHF you should keep an eye economic data domestically, international risk appetite. so war (as this drives demand for the safe haven CHF), and European news, as the SNB trying to loosely peg its currency to the Euro.
The latest figures on the SNB’s balance sheets were released for July, this showed a rise to CHF 714.30 billion, nearly 20 billion more than the previous month. Most only see this climbing.
Moving forward I generally expect the value of the CHF to go in one way, the stakes in the Korean peninsula only seems to be building. On top of that domestic data in the UK continues to cause a weakening of the GBP and CHF data shows strength.
The next data release from Switzerland is Production and Import prices on Tuesday. This is expected to show more gains domestically so buying sooner rather than later may be wise to avoid further costs.
Thank you for reading today’s market report, I would greatly appreciate any feedback you have and would take pleasure in replying personally. I am more than happy to assist you with any of your currency requirements. Feel free to e-mail me here.
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