British Pound vs Swiss Franc (GBP/CHF)

The GBP/CHF currency pair represents the exchange rate between the British pound and the Swiss franc, or the number of francs (the quote currency) needed to buy one pound (the base currency). It consists of two reserve currencies that are in constant demand on a global scale because central banks hold them to withstand economic shocks, pay for imports, settle debts, and control the value of their own currencies. The pair is quite liquid and is a good way to diversify one's portfolio with non-US markets.

GBP (also known as the pound sterling or “Cable” in financial circles) is the oldest currency in use today. It is the official currency of the United Kingdom and several British Overseas Territories. After World War II, the US dollar supplanted the British pound as the primary reserve currency, a position it held for centuries. This shift in the global economy was largely due to the economic dominance of the United States and the establishment of the Bretton Woods system. However, despite losing its status as the primary reserve currency, the British pound remains an important currency in international trade and finance.  

The CHF is a strong currency that represents the competitiveness of the Swiss economy as well as the country's macroeconomic and political stability. The franc is in high demand as a safe currency, especially during times of crisis. 

The British pound's importance as a reserve currency has declined over the last few decades, and the currency has become more volatile in the 2010s as a result of Brexit and other political unrest.

The British pound's importance as a reserve currency has declined over the last few decades, and the currency has become more volatile in the 2010s as a result of Brexit and other political unrest.   

What affects the price of the GBP/CHF pair? 

The trade balance between the United Kingdom and Switzerland, which reflects the difference between exports and imports, can have an impact on the GCP/CHF exchange rate. A long-standing free trade agreement, originally between the EU and Switzerland, binds the two countries and has played an important role in promoting bilateral trade and economic cooperation. The ongoing revision and enhancement of this agreement following the UK’s departure from the EU shows both countries' commitment to further strengthen their trade relationship and address any existing barriers or challenges.

Switzerland is a major physical gold trading centre as well as the location of five of the world's most important precious metal refineries, where 70% of global production is melted down and processed. As a result, changes in gold prices may have an effect on the value of the CHF. If gold prices rise, demand for CHF may rise, causing its value to rise relative to the GBP.

Interest rate differentials can have a significant impact on the GBP/CHF exchange rate. The Swiss National Bank's surprise rate hike in mid-2022 strengthened the franc while weakening the GBP/CHF, as investors sought currencies with higher returns on capital. Similar efforts by the Bank of England during the same period had little impact as investors remained bearish regarding the prospects of the UK economy.

Changes in market sentiment can also influence the pair. The Swiss franc is regarded as a safe haven asset due to its low inflation rate and stable economy. This characteristic makes it especially appealing during periods of economic slowdown or financial instability, allowing the CHF's value to rise relative to the GBP.

When trading GBP/CHF, keep an eye out for data releases and statements from influential UK and Swiss organisations. 

• Bank of England (BoE) and Swiss National Bank (SNB) announcements for interest rates and shifts in monetary policy
• National Statistics (UK) and the Swiss Federal Statistics Office (FSO) for data on Trade Balance, Unemployment Rate, Consumer Price Index (CPI), and Gross Domestic Product (GDP)