The British pound is higher against the Swiss franc on Tuesday.
Investors are selling haven currencies like the franc and buying riskier currencies like the pound amid hopes that a US coronavirus recue bill is on the way.
It’s a modest rebound from an unprecedented decline that has taken the exchange rate to a level never previously recorded. Last Thursday (March 19) the British pound fell to 1.11 against the Swiss franc.
GBP/CHF was up by 87 pips (+0.77%) to 1.1456 with a daily range of 1.1328 to 1.1481 of 11am GMT.
The currency pair is back higher on Tuesday having held 1.13 in a recent pullback and has so far avoided another fall to 1.11 and record lows.
Pound recovers from record low to Swiss franc
The UK is entering is first day of a government-ordered lockdown after Prime Minister Boris Johnson told the British people to stay at home to prevent the spread of the coronavirus.
The move higher in the pound is more a reflection of global risk sentiment than domestic matters. However consensus in markets would appear to be that the ‘stay home’ orders mean the economy has a better chance of a speedy recovery if it swallows some short term pain.
Confidence too is a big part of any economy and the kind of horrific toll the coronavirus is taking on Italy and Spain will be hard for consumers and businesses to bounce back from in a hurry. The best steps a government can take is to limit where possible a public health crisis.
Swiss franc falls as haven demand drops and shares rally
Again, its likely more external factors driving the value of the Swiss franc than those inside Switzerland. Actions taken by the US Federal Reserve yesterday are coming to the aid of financial markets and lessening the need for haven currencies.
There is also a rising belief that the US is close to signing a multi-trillion dollar coronavirus recovery bill; however there appear to still be some political hoops to jump through first. The Senate was reportedly very close to a deal but Trump told Republicans not to agree to Democrat-led stimulus measures.
