The British pound is higher against the Swiss franc on Friday as risk sentiment recovered across global markets with shares, oil, riskier currencies, bond and gold all pointing higher while havens like the Swiss franc and US dollar turned lower.
GBP/CHF was up by 247 pips (+2.18%) to 1.2142 with a daily range of 1.1274 to 1.1615 as of 9am GMT. The currency pair started its ascent Thursday afternoon and after a brief dip from 1.15 has continued higher into Friday towards 1.16.
Pound recovers after BOE rate cut
The pound started its recovery on Thursday after the Bank of England again announced a surprise set of new measures to cushion the UK economy from the likely fallout from the coronavirus pandemic.
Bank of England cut UK interest rates to a record low of 0.1% and began a £200 billion quantitative easing (QE) program. The effect was to sure up market confidence, meaning the pound actually moved higher despite money-printing measures that increase the supply of pounds and so should, all else being equal devalue it.
Swiss franc pulls back after SNB keeps status quo
The decision from the Swiss National Bank on Thursday to leave the sight deposit rate (the Swiss benchmark interest rate) at -0.75% did little to move the Swiss franc.
It is already well understood that the SNB have little policy room for manoeuvre so expectations were already quite low. The Swiss franc had been appreciating before the meeting due to a mix of haven flows and bets that the SNB would change little if anything to their monetary policy stance.
To some extent the moves from other global central banks, particularly the Federal Reserve and the European Central Bank had already done the heavy lifting to try and sooth market concerns. The ECB’s €750bn new QE program has helped calm the sharp move higher in Italian bond yields and the new dollar swap lines created by the Fed should go some way to fixing dollar shortages that had seen the price of the dollar skyrocket this week.
