Swiss Franc FX Forecast: GBP/CHF Exchange Rate Falls after UK CPI, Swiss Gold Referendum

November 18, 2014 - Written by Frank Davies

STORY LINK Swiss Franc FX Forecast: GBP/CHF Exchange Rate Falls after UK CPI, Swiss Gold Referendum

The British Pound slid against the Swiss Franc (GBP/CHF) on Tuesday after advancing versus the safe-haven asset on Monday.

The Pound Sterling (GBP) was thought to have climbed in anticipation of the Swiss Gold Referendum, which could see the Swiss National Bank (SNB) make major changes to its reserves.

The ‘Save Our Swiss Gold’ initiative wants the central bank to maintain 20% of its reserves in gold rather than foreign exchange. However, the SNB has stated its preference for forex due to its liquidity.

CHF Rates Today:

The Pound to Swiss Franc exchange rate today (GBP/CHF) is converting -0.7 per cent lower at 1.49827.
The Euro to Swiss Franc exchange rate today is converting at 1.20129 EUR/CHF.
The US Dollar to Swiss Franc exchange rate today is -0.67 per cent lower at 0.95835 USD/CHF.
The Canadian Dollar to Swiss Franc exchange rate: CAD/CHF conversion is -0.69 per cent lower at 0.84821.
The Aus Dollar to Swiss Franc is -0.53 pct lower with a conversion rate of 1 AUD equals 0.83572 CHF.

Surprise UK Consumer Price Inflation Rise as Toy Prices Increase

Meanwhile, the GBP/CHF exchange rate was also affected by the UK’s latest inflation report. The UK Consumer Price Index rose to 1.3% on the year in October despite economists’ forecasts for the index to stagnate at 1.2%.

The Bank of England (BoE) recently stated that it expects inflation in the UK to dip below 1% temporarily in the near future. However, one problem posed by the increasing consumer prices is that recent wage growth has been undermined.

UC General Secretary Frances O’Grady commented: ‘The first signs of progress on real wages have already been stopped in their tracks. Weak demand remains the big problem facing the British economy. With inflation predicted to remain low well into next year, any talk of interest rate rises is dangerously out of kilter with today’s economic situation.’

Will the British Pound Rise vs the Swiss Franc?

UK interest rates have been a hot topic for some time now, with economists pushing back their expectations regarding the first increase in borrowing costs rather frequently. Not so long ago, speculation mounted that rate hikes would occur before the close of 2014. However, recent UK data has highlighted that the economic recovery is uneven.

Wednesday will see the release of the Bank of England’s meeting minutes, which could prove to be another influential event for the Pound.

The Monetary Policy Committee (MPC) has seen two of its nine members break away and vote for an immediate increase in interest rates in the last three meetings.

If the division remained at the last gathering the minutes could support the Pound.

Pound to swiss Franc Exchange Rate Forecast: Swiss ZEW Economic Expectations Survey

Also out on Wednesday is the Swiss ZEW Economic Expectations Survey. The November figure is believed to have risen from October’s -30.7.

Thursday will be another day that could encourage GBP/CHF movement as the Swiss Trade Balance is out. The full effect of the stagnating Eurozone on the Swiss economy is yet to be seen, but the imports/exports figures may shed some light on the situation.

UK Retail Sales are due out on Thursday and expected to increase by 0.3% on the month in October, which would bring the annual figure up to 4.2%. As UK inflation increased on Tuesday, the breakdown of the Retail Sales figures will be of great interest to economists. The rise in consumer prices is thought to have occurred from a surge in computer game and toy values. Another influential event for the GBP/CHF currency pair will be Swiss National Bank Governing board member Fritz Zurbrugg speaking on Thursday. Any speeches from either the Bank of England or the Swiss National Bank could see further GBP/CHF fluctuations.

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