GBP/CHF Muted, Britain’s Borrowing Jumps 

The Pound Sterling Swiss Franc (GBP/CHF) exchange rate was flat in forex, leaving at around 1.1898Fr.

The Pound struggled to make significant gains against the Franc. This is despite an increase in optimism over a coronavirus vaccine and an agreement from the EU.

The agreement from the bloc on a crucial recovery fund offered GBP support against other major currencies in FX markets. This allowed it to extend Monday’s rally.

The start of the week saw the sterling enjoy its best day in three weeks. Investors were focusing on the upswing in risk appetite and overlooked the downbeat data and small amount of progress in UK-EU post-Brexit talks.

Early data from trials of three possible coronavirus vaccines also offered support for the currency. Lee Hardman, MUFG Strategist, said that generally, it’s more about improvement in general risk sentiment. When you have risk in equities, the pound generally benefits, he added.

Meanwhile, the latest borrowing data from the British government limited gains against the CHF.

In the first three months of the financial year, borrowing soared to a record £127.9 billion. This figure was more than double the total for the 2019/2020 financial year.

This, added with the risks of Brexit means sterling gains were limited. This pessimism is obvious in the speculative positioning for the currency.

CHF Flat with Optimism on EU Recovery Fund and Vaccine

Today’s jump in risk appetite weighed on the safe-haven Swiss Franc, and offered riskier assets, such as the GBP, support.

The massive stimulus recovery plan from the EU boosted risk appetite and offered support for coronavirus-hit economies in the bloc. The deal compromises on concerns that northern states had about handouts.

Some labeled this as a significant signal of unity from Europe’s leaders. It also sets up a foundation for the EU to recover from the crisis.

Charles Michel, EU Summit chairman, said it was a ‘pivotal moment’ for Europe. This agreement sends a concrete signal that Europe is a force for action, he added.

Analysts at ING said the mix of the agreement and the progress on a Covid 19 vaccine should keep the risk environment supported today.

But the rise in risk appetite did not help enough to boost GBP/CHF and the exchange rate remained flat.

Forex news reports the Franc was offered some support after the country’s trade surplus widened to 2.8 billion Franc. Both imports and exports increased in June.