GBP/CHF is slightly advancing on Friday. However, the pair is about to conclude the week in the negative territory after six consecutive bearish sessions. Currently, one British pound buys 1.1872 Swiss francs, up 0.08% as of 11:10 AM UTC. The price has declined over 3.60% during the last six trading sessions.
Coronavirus Outbreak Still in the Spotlight
Yesterday, both the UK and Swiss stock markets experienced dramatic losses amid the coronavirus panic in Europe. The UK’s FTSE 100 index tumbled almost 10% to the lowest level since 2012, which was the biggest daily loss since 1987. Elsewhere, the Swiss Market Index (SMI) was down almost 10% as well, to the lowest since the end of 2018.
On Thursday, Credit Suisse closed the session down 16%, while UBS dropped by 13.2%.
Despite the slight increase, GBP/CHF has updated the year-to-date low this morning. The pair has been moving downwards since mid-December of last year when it traded above 1.30. The pound has lost ground since then as Britain left the European Union and faces significant difficulties amid trade talks with the bloc.
The franc slightly weakened after US President Donald Trump imposed a ban on travelers from and to Europe, though it excludes the UK. The Swiss manufacturing association Swissmem condemned Trump’s decision as “incomprehensible.” The Swiss-American Chamber of Commerce expressed worries that the move might severely impact local companies if borders keep closed for more than a month.
It’s worth mentioning that the United States is Switzerland’s second-largest trade partner behind the EU. In 2019, Switzerland exported about $44.2 worth of its goods to the US.
Swissmem told the media:
“The entry ban is an incomprehensible and negative sign, which further burdens the already strained business climate and massively increases uncertainty. The bigger and longer the disruption in air freight capacities, the more serious the consequences will be for Swiss industrial companies.”
Elsewhere, the UK moved to the next phase of its strategy of fighting the coronavirus impact. Earlier today, the minutes from the Bank of England’s (BoE) meeting showed that the central bank has the option to cut interest rates even lower to support the economy. On Wednesday, the central bank surprised the markets by reducing the rates by 0.50% to 0.25%. The minutes said:
“Should the MPC need to provide further monetary stimulus, there were a number of options at its disposal, including cutting Bank Rate further, enlarging the TFSME (Term Funding scheme with additional incentives for Small and Medium-sized Enterprises), and expanding asset purchases.”
