The pound settled at $1.3045 on Thursday, September 12, 2024, after recording a drop to $1.30025 in the previous session, its lowest level since August 20, 2024. This stability comes at a time when the pound is witnessing marked volatility, as its stability reflects some improvement after the recent decline. The pound sterling has seen a decline during the last period, which has raised investor concern about the effects of this decline on the British economy and international trade. Recent exchange rate movements point to ongoing pressure on the British currency, reflecting the challenges the UK faces in light of the current economic and political changes. On the other hand, the Swiss franc recorded a significant decline, as the dollar rose by 0.2% to 0.8543 francs. This rally marks the highest level for the dollar since August 21, 2024. This change in exchange rates shows an interaction with global economic events and financial market developments, as the dollar plays an important role as a safe-haven currency in times of instability. The movements of the British pound and the Swiss franc reflect the dynamics of global financial markets, with currencies affected by macroeconomic developments and monetary and trade policies. For the pound, the current stability could signal relative improvement after a period of declines, but investors should closely follow economic and political developments in the UK to assess future trends112>. Financial and technical analysis plays an essential role in understanding how these movements may affect global markets. These factors include changes in monetary policy, geopolitical tensions, and economic performance indicators that affect the actual value of currencies. Despite the relative stability of the pound, there are still many factors that may affect its value in the future, including upcoming economic data, government policies, and unexpected global events.
The impact of the franc on the Swiss economy
The depreciation of the Swiss franc can have multiple effects on the Swiss economy. The Swiss franc is considered a safe-haven currency, usually relatively strong, but its decline can have both positive and negative repercussions. First, one of the positive effects of the devaluation of the Swiss franc on the Swiss economy is the improvement of the competitiveness of Swiss products in international markets. When the franc exchange rate depreciates, Swiss exports become relatively cheaper for foreign buyers, boosting demand for Swiss products and increasing export volumes. This can be particularly beneficial for Swiss companies that rely on global markets, as they can contribute to increasing revenues and boosting economic growth.. Second, the depreciation of the franc may support tourism in Switzerland. When the franc is weak, travel and accommodation costs in Switzerland become less expensive for foreign tourists, which can lead to an increase in the number of international visitors to the country. This could boost the tourism sector, which is one of the important sources of revenue in the Swiss economy, and create new jobs in the sector. On the other hand, there are negative effects of the depreciation of the Swiss franc. The most prominent of these effects is the increase in the cost of imports. When the franc falls, imported goods and services become more expensive for Swiss consumers and companies. This can lead to higher production and operating costs, which can negatively affect businesses that rely heavily on raw materials or imported goods. Higher costs can also lead to higher costs of the franc .Imports to increase inflation levels, which may affect the purchasing power of consumers. Also, the depreciation of the franc can cause negative effects on Swiss companies with foreign currency investments or debt.
Investors benefit from exchange changes
Traders and investors can take advantage of current changes in exchange rates in multiple ways, enhancing the chances of making profits and reducing risk. First, changes in exchange rates can be exploited through foreign exchange trading. When a currency depreciates, traders can buy currencies that you expect to appreciate in the future, allowing them to take advantage of spreads. For example, if there is a noticeable depreciation of the Swiss franc against the US dollar, it may be useful to buy the US dollar and sell the Swiss franc to make profits when The franc does not return to its previous value or when the value of the dollar rises. Second, investors can use hedging strategies to reduce the risk of exchange rate fluctuations. Hedging is the process of protecting their investments from the risk of unexpected changes in exchange rates. This can be achieved via options or futures contracts that allow them to lock the current exchange rate, providing protection against any negative changes in the future. Third, investors can make profits by investing in financial markets that benefit from changes in exchange rates. For example, export-dependent companies may benefit from the appreciation of their local currency because this reduces the cost of exported goods and contributes to increased profits. Similarly, companies that import goods may benefit from the depreciation of the local currency as import costs become lower. Fourth, traders can use technical analysis to analyze price patterns and make informed decisions about the timing of buying and selling operations. Technical analysis is based on the study of charts and past trends to predict the movement of future exchange rates. This can help traders make quick decisions based on available information about possible changes in exchange rates.
