GBP/CHF: Swiss Franc Soars after Record-Breaking Oil Price Crash

The British pound is lower against the Swiss franc on Monday with a crashing oil price sending wider markets into a complete panic. The price of Brent and WTI crude oil futures plummeted 30% on Monday, causing a massive wave of risk-off sentiment across currency markets that benefitted the Swiss franc as a perceived haven.

GBP/CHF was down by 89 pips (-0.73%) to 1.2142 with a daily range of 1.2035 to 1.2219 of 3am GMT. The currency pair had slumped well below the 1.21 handle in early trading but saw a strong rebound off the lows to reclaim 1.215. The losses on Monday match the entire last week’s loss of -0.71%.

The GBP currently perceived as a riskier currency

The new week has unfolded with huge market moves, including the price of oil losing almost a third of its value in one day. Stock markets have turned decidedly bearish with the worst single day opening loss (over 6%) in Australian stocks since the financial crisis. Shares in the United Kingdom and Switzerland are expected to see heavy losses at the open on Monday.

The pound is perceived as being a riskier currency to hold when financial markets are in trouble because of the large capital flows that go through the City of London. This week the main item on the economic calendar for the UK will be the budget of Wednesday March 11, the first one under Prime Minister Boris Johnson and also the first since Brexit.

Swiss National Bank reserves increased in February

Having fallen below 1.21, the currency pair has now lost 1 big handle (1000 pips) since its December 13 peak at 1.31. Rising bets that the UK will lower interest rates in combination with the franc’s status as a haven during the coronavirus outbreak have acted in concert to push the GBP/CHF exchange rate substantially lower.

Data on Friday showed the Swiss National Bank’s foreign currency reserves increased by more than 5 billion Swiss francs ($5.3 billion) during February. It is evidence that Switzerland’s central bank has been intervening in the currency market. The SNB is selling Swiss francs in order to slow the appreciation of the currency which hurts demand for Swiss exports. So far the intervention is not working maid a flow toward haven assets, increasing calls for a potential Swiss rate cut.

Currencylive.com is a news site only and not a currency trading platform.

Currencylive.com is a site operated by TransferWise Inc. (“We”, “Us”), a Delaware Corporation. We do not guarantee that the website will operate in an uninterrupted or error-free manner or is free of viruses or other harmful components. The content on our site is provided for general information only and is not intended as an exhaustive treatment of its subject. We expressly disclaim any contractual or fiduciary relationship with you on the basis of the content of our site, any you may not rely thereon for any purpose. You should consult with qualified professionals or specialists before taking, or refraining from, any action on the basis of the content on our site. Although we make reasonable efforts to update the information on our site, we make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up to date, and DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Some of the content posted on this site has been commissioned by Us, but is the work of independent contractors. These contractors are not employees, workers, agents or partners of TransferWise and they do not hold themselves out as one. The information and content posted by these independent contractors have not been verified or approved by Us. The views expressed by these independent contractors on currencylive.com do not represent our views.