The British pound is lower against the Swiss franc on Tuesday ahead of the expected announcement of a huge rescue package for the United Kingdom by Chancellor Rishi Sunak. Meanwhile the Swiss franc is still attracting haven flows with European share prices lower again.
GBP/CHF was down by 24 pips (-0.73%) to 1.2142 with a daily range of 1.2035 to 1.2219 of 3am GMT.
GBP/CHF failed to get beyond 1.165 on numerous occasions and eventually fell back below the 1.16 handle but so far remains off yesterday’s low.
Pound treads water before “substantial” UK rescue package
UK Chancellor Rishi Sunak will attend the press conference, which is now held daily by UK Prime Minister Boris Johnson. Reports indicate Sunak will announce a “significant” rescue package of financial measures to Support British workers and businesses. This comes on top of the significant spending boost that came in the March budget. Part of the measure could potentially include a bailout for airlines which have grounded most of their fleet because of border closures and other travel restrictions.
Sterling is struggling to make any headway despite the possible government stimulus measures because of a likely move by the Bank of England to slash interest rates again. New BOE Governor Andrew Bailey gave strong indications the central bank would introduce new easing measures in comments on his first day on the job.
Swiss franc gains as Switzerland declares state o f emergency
Demand for havens like the franc is being capped by an increasing determination from national governments to support struggling economies. However the stimulus measures are needed because of tight restrictions being put on the freedom of movement in emergency legislation. Japan’s Finance Minister Aso said today he will hold a teleconference with other G7 finance ministers.
Switzerland has declared a state of emergency in response to a rising number of coronavirus infections. Swiss President Simonetta Sommaruga told a press conference: “A strong reaction is needed across the country. And we need it now.” Matching the moves in many European countries, all shops, restaurants and leisure facilities will be closed with the exception of essentials like supermarkets and pharmacies.
