Pound Climbs versus Swiss Franc (GBP/CHF) as Upbeat UK Ecostats Emerge

March 31, 2015 - Written by James Fuller

STORY LINK Pound Climbs versus Swiss Franc (GBP/CHF) as Upbeat UK Ecostats Emerge

The Pound advanced against a host of other majors, including the Swiss Franc, on Tuesday after upbeat UK ecostats emerged. A UK Consumer Confidence survey rose to 4 in March rather than the expected 2 from February’s 1. It’s expected that sentiment may be shaken in the run-up to the UK general election with many experts suggesting a political shakeup could be on the way. Industry expert Nick Moon stated: ‘A consistently rising index in the run-up to the general election is likely to be good news for the government.’ In addition to the rise in sentiment, the UK economy performed better-than-expected in the fourth quarter, with the Gross Domestic Product figure reaching 3.0% on the year. Economists had previously estimated 2.7% growth.

However, Pound sentiment is expected to become increasingly volatile as election fears continue to heighten—a development that could begin to outweigh upbeat growth stats. Expert in the field Valentin Marinov stated: ‘The prospect of a hung parliament or unstable multi-party coalition will continue to weigh on Sterling sentiment, leaving it vulnerable, especially against the US Dollar.’ The Pound can expect the next few months trading to become increasingly political as investors edge away from uncertainty.

Meanwhile, the Swiss economy had some upbeat news on Monday when the KOF Leading Indicator rose from 90.3 to 90.8 in March, rather than falling in line with 89.1 estimates. However, the Swiss Franc’s appreciation since the Swiss National Bank removed the cap on the currency has caused havoc for the Swiss economy as well as many companies in other countries. Swedish company Hexagon is the latest to feel the impact, being forced to shed 400 staff members in both Switzerland and the US. Hexagon suggests it will be able to save a massive 35 million Euros per year once the cuts are made. The company stated: ‘Hexagon is in the process of implementing a cost reduction programme in order to mitigate this negative impact on the margin.’

Over the rest of the week several factors could impact the Franc and the Pound, such as Wednesday’s UK manufacturing data. The sector is expected to record growth in March, with a seasonally adjusted rise in the index from 54.1 to 54.4. Additionally, the Swiss SVME Purchasing Managers Index will be out in Wednesday’s session which could impact the Franc moderately. However, if political party debate heats up in coming weeks, the UK currency could become bearish.

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