Pound to Swiss Franc Exchange Rate Relatively Static after UK Inflation Falls; Heavy Data to Come

December 17, 2014 - Written by Frank Davies

STORY LINK Pound to Swiss Franc Exchange Rate Relatively Static after UK Inflation Falls; Heavy Data to Come

The Pound stayed within a narrow range against the Swiss Franc after UK consumer prices fell.

The Consumer Price Index (CPI) was expected to dip from 1.3% to 1.2% in November; however, the actual figure fell even further to 1.0. Recent falls in the price of oil have contributed greatly to the softer inflation figure. Economist David Kern commented: ‘While weak energy and food prices are pushing down inflation, domestic pressures are also easing. A rise towards the 2% inflation target is unlikely well into 2016.’ The week started rather negatively for the Swiss Franc with Swiss Producer and Import Prices falling by -0.7% in November. The annual figure was dragged even further down from -1.1% to -1.6%.

Wednesday could be another influential day for the Swiss Franc with the KOF Institute Winter Economic Forecast and ZEW Survey Expectations reports due for release. The ZEW surveys can be rather weighty as they indicate sentiment in the area. The Swiss Franc has plenty of opportunity to move this week with several key data releases yet to come. SECO December 2014 Economic Forecasts, Swiss Trade Balance, Imports and Exports figures are all scheduled for Thursday, ahead of UK Retail Sales figures which could enable additional movement in the Pound to Swiss Franc exchange rate.

Meanwhile, investors in the Pound are eager for the release of the latest Bank of England (BoE) meeting minutes on Wednesday. Any whiff of Monetary Policy Committee (MPC) divergence could see the Pound climb against other majors. In recent months, two of the nine policymakers (Martin Weale and Ian McCafferty) have voted in favour of immediate interest rate hikes. However, as UK figures slow, many economists have priced out a rate hike until late 2015.

Any slowdown in the UK economic recovery causes fears that the central bank will postpone rate rises in the near future. However, after Tuesday’s inflation fall, the MPC is likely to be offered a little more time before needing to increase borrowing costs. Kearn continued: ‘These figures will make it easier for the MPC to resist calls for higher interest rates. The UK recovery is still facing challenges.’

Although Wednesday will see the release of the meeting minutes, other influential data could affect the Pound. UK Employment Change, Average Weekly Earnings, Claimant Count Rate Unemployment Rate, Jobless Claims and Weekly Earnings figures will all be out and are likely to cause Sterling exchange rate fluctuations. Friday will close the week with UK Central Government NCR, Public Finances and Public Sector Net Borrowing ecostats released. This data could have further influence on the Pound.

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