Swiss Franc Firm, Undisturbed by Dovish SNB

The Swiss franc gained on most other major currencies, with the exception of the Great Britain pound, which got a boost from the relatively hawkish stance of the Bank of England. The outlook expressed by Switzerland’s own central bank was far less optimistic, but that did not prevent the Swissie from rising.

The Swiss National Bank kept interest rates unchanged at today’s policy meeting, as was widely expected. The interest on sight deposits at the SNB remained at -0.75% and the target range for the three-month Libor stayed at the range between -1.25% and -0.25%.

The SNB revised its inflation forecast upward up until mid-2019, but afterwards the outlook was actually lowered. Furthermore, the forecast assumed that interest rates will remain unchanged in the negative territory “over the entire forecast horizon.” The major concern for the central bank was political uncertainty in the European Union and US protectionism:

The risks to the SNB’s baseline scenario are more to the downside. Chief among them are political developments in certain countries as well as potential international tensions and protectionist tendencies.

USD/CHF dropped from 0.9960 to 0.9919 as of 16:37 GMT today. EUR/CHF declined from 1.1533 to 1.1508, reaching the low of 1.1478 intraday. At the same time, GBP/CHF rose from 1.3115 to 1.3138.

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