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Pound Climbs Versus Swiss Franc (GBP/CHF) Despite Resilient Swiss Data

March 3, 2015 - Written by David Woodsmith

The Pound advanced against the Swiss Franc on Tuesday after both upbeat UK and Swiss data emerged. The day began with Swiss Gross Domestic Product stats, which showed stronger-than-expected expansion. The fourth quarter of 2014 recorded 0.6% growth Q-o-Q, allowing the annual figure to remain steady at 1.9% rather than fall to 1.7% as predicted. However, the ecostat reviews the period of time before the Swiss National Bank removed its cap between the Euro and the Swiss Franc. Reuters commented: ‘The cap’s removal sent the Swiss Franc soaring on foreign exchange markets, creating problems for exporters—the engine of the Swiss economy—and raising expectations the central bank will lower growth forecasts at its March 19 meeting.’

Despite the resilient data, the Swiss Franc managed to fall to fresh one and a half month low on Tuesday against both the Pound and US Dollar. Since the initial SNB announcement, the Franc has weakened significantly.

Meanwhile, the UK is on a roll when it comes to Purchasing Managers Indexes so far this week. Monday saw Markit’s UK Manufacturing PMI reach 54.1 in February from 53.1, rather than the 53.4 economists had expected. Any figure that breaches the 50.0 benchmark is favourable as it denotes growth. Meanwhile, Tuesday continued the PMI stream with the UK’s Construction PMI dancing over the 60.0 threshold at 60.1. January’s ecostat had resided at 59.1 and economists had expected a softer 59.0.

Industry expert David Noble commented: ‘The construction sector is awash with positive sentiment rejecting wholeheartedly the downbeat end to last year, with the steepest rise in output activity for four months. The good fortune comes in threes – as respondents report a rise in staffing levels, higher levels of new orders and rising rates for sub contractors.’

However, industry experts are continually warning that the upcoming UK general election is likely to dampen sentiment in the near future and cause Pound volatility. Noble continued: ‘One small dark spot on the horizon concerns outcomes of the General Election, with a “wait and see” approach from customers such as the public sector. Though there may still be some obstacles ahead, the construction sector is ready to continue to bulldoze a positive path ahead.’ As Noble comments, the May general election could see a large-scale political shake-up take place, which could cause citizens to become more cautious, as well as seeing the Pound retreat.

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