GBP/CHF Forex Trading Guide

If you're even passively acquainted with global currency markets, you would have come across the GBP/CHF forex pair by now. GBP/CHF is an abbreviation that denotes the British Pound Sterling and the Swiss Franc currency pair. More specifically, GBP/CHF describes how many Swiss Francs it currently costs to purchase a single British Pound on the global marketplace.

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For example, if GBP/CHF is currently trading at 1.27, then it costs 1.27 Francs to purchase one British Pound. This currency pair is widely traded across all markets for a number of very good reasons. The British Pound and the Swiss Franc are the world’s fourth and eighth-largest reserve currencies respectively, representing the economies of two global financial centers that are among the most influential countries on Earth.

Thus, GBP/CHF forex trading requires the ability to stay on top of your brief and put your financial knowledge to the test. Read on to find out everything you need to know about trading GBP/CHF.  

Symbol for GBP: £

Symbol for CHF: CHf

What is GBP/CHF Forex Trading? 

Simply put, GBP/CHF trading is one of the most popular forms of forex trading out there. Forex trading is simply the act of buying and selling various pairs of currencies, with the intention of profiting on incremental (or significant) changes in the value of one currency relative to another.

With GBP/CHF forex trading, you might be buying GBP/CHF in the hope that the Pound’s value relative to the Swiss Franc will rise, allowing you to sell later on for a profit. Forex trading is a lynchpin of global finance, with trillions of dollars in trades being executed every single day.

The majority of forex trading takes the form of day trading, where all buy and sell orders are completed within a single day, rather than holding onto an asset for months or years. With non-volatile pairs like GBP/CHF, understanding how day trading works is especially important. 

History of the GBP/CHF Forex Pair

The British Pound has existed in many forms throughout its 1200-year history, with the earliest known versions of the GBP dating all the way back to the Anglo-Saxon period.

Owing to the UK’s historical position in global politics, the British Pound has been, at times, the world’s de facto reserve currency and the official fiat currency of dozens of nations and territories. Today, it is one of the world’s most valuable currencies and the world’s fourth most widely-held foreign reserve currency. 

The Swiss Franc, meanwhile, was first introduced in 1850, as part of emerging efforts to bring the kaleidoscope of Swiss cantons under one federated union.

The introduction of the Swiss Franc, which was once pegged to the French Franc, coincided with Switzerland’s rise as the world’s private banking capital. Similarly, the Swiss Franc is one of the world’s most expensive and valuable currencies and is synonymous with stability. 

GBP/CHF forex trading is immensely popular for a number of reasons, such as:

  • A highly predictable currency pair with a price that is “news-resistant” and generally unaffected by general global events.
  • Substantial liquidity owing to the constant global demand for Pounds and Francs. 
  • Mild volatility and easy to understand, since the UK and Switzerland have broadly similar economies. 
  • Almost never affected by US economic news, making this a great option for diversifying your forex portfolio. 

Factors that Influence the GBP/CHF

However, the GBP/CHF is a currency pair that, while predictable, is influenced by a myriad of factors, such as: 

  • Key economic developments and events in both the United Kingdom and Switzerland. 
  • Eurozone economic events and developments. 
  • Decisions made by either the Bank of England or the Swiss National Bank (SNB). 
  • Changes in prices of global commodities such as gold and silver. 

The Role of the GBP

The British Pound is the world’s fourth-largest reserve currency, the most valuable European currency, and one of the world’s oldest continuously existing currencies.

Although the Pound was once considered broadly stable, its extreme volatility since the 2016 Brexit vote has changed these perceptions, making trading GBP/CHF much more interesting. The GBP is governed by the Bank of England, which sets monetary policy and interest rates. 

The Role of CHF  

The CHF is the currency of Switzerland, the de facto private banking capital of the world, where a full one-third of the planet’s privately-held wealth is stored.

Switzerland’s strong banking sector and favourable regulatory environment have helped this small mountainous corner of Europe become one of the wealthiest countries in history.

This helps to explain the stability, value and popularity of the Swiss Franc on the global marketplace. The Swiss National Bank, or SNB, is responsible for monetary policy and is, therefore, the organisation to pay attention to if you are trading GBP/CHF. 

Strategies on Forex Trading GBP/CHF

When day trading GBP/CHF, even the slightest price movements can mean the difference between big profits and crushing losses. That is why it is important to keep your eye on the ball when trading GBP/CHF and understand the key strategies to bear in mind, such as: 

Pay close attention to the market fundamentals. Simply staying on top of UK-Swiss financial news is one of the most effective things you can do to inform your buy and sell positions.

Always monitor correlated pairs and commodities. The GBP/CHF is strongly positively correlated to CHF/EUR and the price of gold, partly due to the fact that the vast majority of Switzerland’s wealth is backed by its immense gold reserves. 

Always have a rigid exit strategy and stop-loss in place, as this will ensure that any sudden market movements don’t wipe you out. 

When to Buy or Sell GBP/CHF

The best time to trade GPB/CHF is during London trading hours, which are between 8 am and 4 pm GMT. This is because this is the time where GBP/CHF will be most liquid, as well as the time when the vast majority of all price fluctuations will take place.

It is important to use the educational and analytical resources at your disposal in order to determine the best times to buy and sell.

Let’s walk through an example trade to better understand when to buy and sell GBP/CHF. Let’s say you are expecting the Bank of England to release some positive inflation data, which would likely result in the value of the GBP rising against the CHF.

In this scenario, you would hit BUY on GBP/CHF, in the hopes of profiting from this predicted rise. Conversely, let’s say that Switzerland is due to sign a financial services agreement with another major economy, such as the US. In this scenario, it would be best to hit SELL on GBP/CHF, as it is likely that the CHF’s value against the Pound will rise. 

How to Trade GBP/CHF

Trading GBP/CHF is simple, straightforward, and predictable, which is exactly why it is so popular with retail traders and institutional investors alike.

Owing to the near-constant demand for GBP and CHF on the global market, you can expect near-total liquidity, meaning you should be able to buy and sell this pair whenever you want, for the exact price you see on the ticker.

As long as you have a trusted, licensed, and reputable forex brokerage platform at your disposal, buying and selling the GBP/CHF forex pair will be a trouble-free experience. 

Profit with GBP/CHF

Trading GBP/CHF is one thing, but making a profit is quite another. As mentioned, the GBP/CHF is not the most volatile of pairs, so don’t expect to make a killing overnight.

Even during periods in which the GBP is highly volatile against currencies such as the Euro and US Dollar, you are unlikely to see any major movements on GBP/CHF.

That’s why your goal should be to capitalize on dozens of tiny fluctuations throughout the day; a strategy known as day trading.

Close Your Position to Take a Profit or Cut a Loss 

When you are hoping to profit from small currency price movements, one bad price move can wipe out your gains in less than a second.

You should always have a strong and clear exit strategy in place to reduce aggregate losses, especially if you are trading on margin.

Likewise, you should pay close attention to the market to get an informed picture of when your profits for the day might have peaked. Knowing when to quit while you’re ahead is absolutely essential when trading GBP/CHF.

Choose a Broker & Open an Account 

When trading a major currency pair such as GBP/CHF, choosing a trusted and licensed broker is absolutely essential. 

A quality broker will work with expert data and resources to help you make informed trades. They will offer direct market access to allow you to buy and sell at exactly the moment that you want to.

They will hold valid licenses from trusted financial regulatory bodies, to guarantee the safety of your money. To find out which brokers offer all of these crucial elements, make sure to check out our reviews of trusted forex brokers today.

Although GBP/CHF is a broadly stable and predictable pair, there are some downsides to trading it, such as:

  • The lack of volatility, which can be a plus, also means that you should not expect any opportunities to make an instant fortune with this pair. 
  • Although liquidity is usually very high, GBP/CHF is more likely to experience occasional illiquidity than some other pairs, owing to the fact that it is a minor currency pair. 
  • Leverage risks: leverage offered by brokers allows you to borrow capital to increase the size of your position. While this can increase potential profits, it can also seriously maximize losses.

Conclusion

GBP/CHF is a currency pair that involves two of the world’s most important financial centres, as well as the two countries where almost half of all forex trading is actually cleared. Both are exciting currencies that have a lot to offer for both beginner and seasoned forex traders alike.