Pound to Swiss Franc (GBP/CHF) in Narrow Range after UK Stats, Swiss Data to Come

January 27, 2015 - Written by Ben Hughes

STORY LINK Pound to Swiss Franc (GBP/CHF) in Narrow Range after UK Stats, Swiss Data to Come

The Pound stayed in a narrow trading range with the Swiss Franc on Tuesday after UK Gross Domestic Product ecostats showed a marginal increase. The final quarter of 2014 saw the year-on-year figure rise from 2.6% to 2.7%, ignoring 2.8% expectations. In the fourth quarter alone, growth reached 0.5%, shy of the 0.6% predicted. UK economic growth has slowed a little in the second half of 2014, but still recorded a seven-year high across the year as a whole. Economist Samuel Tombs commented: ‘Nonetheless, the fourth quarter rounds off what has been an impressive year of growth for the UK economy, with the 2.6% annual rise in GDP looking likely to have been the largest amongst the G7 economies.’

Tombs’ believes that UK GDP could expand further this year. Tombs continued: ‘We think that GDP growth could pick up to 3% this year. In short, the best days of the UK’s recovery may still lie ahead.’ However, Loans for House Purchase dropped again in December for the sixth consecutive month. Overall, gross borrowing has fallen 12% in comparison to a year ago. Industry expert Richard Woolhouse stated: ‘The mortgage market has been softening since the spring, but for customers taking out home loans right now there are some great deals and we expect the market to begin to grow again this year.’

Meanwhile, the Swiss Franc can expect some opportunity for gains on Wednesday with the release of the UBS Consumption Indicator. The index, which measures consumer spending in Switzerland, resided at 1.29 in November and any increase in December could allow Franc gains. The Swiss Franc recently slid to its lowest level against the Euro since the Swiss National Bank removed the cap. The market shock after the initial announcement was widespread and the Franc has only just begun to normalise. The recent fall against the Single Currency was a result of SNB official Jean-Pierre Danthine stating that the central bank was prepared to intervene in the currency market to keep the ‘Swissie’s’ value low.

Friday could be another influential day for the Swiss currency with the release of the KOF Leading Index. The index is expected to decline in January from 98.7 to 94.7. The Swiss Franc could suffer losses toward the end of the week if the index does dip. The UK Consumer Confidence index will also be published on Friday and could prop the Pound up if favourable. The report is expected to reach -2 in January after December’s -4.

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