Pound Sterling to Swiss Franc Exchange Rate (GBP/CHF) Higher Today on BoE Stability Report

June 24, 2014 - Written by Ben Hughes

STORY LINK Pound Sterling to Swiss Franc Exchange Rate (GBP/CHF) Higher Today on BoE Stability Report

Today saw the Pound Sterling to Swiss Franc exchange rate (GBP/CHF) recover recent losses, trading 0.34 pct higher on Thursday. The BoE's Financial Stability Report reassured markets that action will be taken to protect the British economy's recovery and calm the UK property price boom.

As of 21:00 GMT on Thursday, the Pound Swiss Franc exchange rate sits at 1.52140 GBP/CHF, 0.34 per cent higher than Wednesday's close.

The Pound to Swiss Franc exchange rate (GBP/CHF) declined earlier in the week as Sterling fell against all but one of its most traded peers after investors were disappointed by comments made by Bank of England policy makers in an address to the parliament Treasury Select Committee.

Data released early in the session offered the Swiss Franc some support as it showed an improvement in the Alpine nations trade balance.

According to the Federal Customs Office the nation’s trade balance improved in May by rising to CHF2.774 billion, up from the previous figure of CHF2.448 billion. Further gains were limited however as the report also showed that Switzerland’s exports dropped.

Real exports fell by 0.9% to CHF17.253 billion. Swiss exports were thought to have decline due to a fall in demand from a struggling Eurozone where slow growth is weakening business and consumer confidence.

The export of chemicals and pharmaceuticals, the nation’s major exports fell by 1.9%, exports of machine goods and electronics also declined by 3%.

Last week, the Swiss government scaled back its forecasts for economic growth for this year and next, citing weak growth in the European Union, which could weigh on appetite for Swiss goods.

“The rebound in growth remains moderate, but is perfectly in line with forecasts for the first-half of the year,” the SNP said in a statement.

As the session progressed the Swiss Franc along with most other currencies advanced against the Pound.

Pound Sterling tumbles against Dollar and Euro rates

The UK currency tumbled away from a five and half year high against the US Dollar and fell below the psychologically important 1.25 level against the Euro after BoE Governor Mark Carney toned down his rhetoric as to when the Bank will increase the UK’s interest rate.

In a testimony to the governments Treasury Select Committee Carney was criticised for his lack of clarity regarding the Central Banks outlook on interest rates.

“Developments on the wage front suggest to me that there has been more spare capacity in the labour market than we had thought. The exact timing of any increase in the BoE’s key rate will be driven by the data,” said Mr Carney.

The Pound dropped after his comments as investors were confused by the seemingly sudden u-turn by the man who only two weeks again hinted that rates would rise before the end of the year. One government lawmaker branded Carney as being like an ‘unreliable boyfriend’.

“The Bank of England’s testimony to the Treasury Select Committee left money markets reeling from yet another whipsaw in policy outlook. After suggesting that rate hikes may happen sooner than expected in his Mansion House speech, Carney shocked the market with a far more dovish performance. “Despite recognising that the UK economy has a lot more momentum than previously thought, Carney cannot shake the inconsistency of weak wage growth, which he believes proves the existence of spare capacity in the UK economy and justifies later rate rises,” said Eimear Daly, head of market analysis at Monex Europe.

Sterling also dropped sharply against the US Dollar after data showed that US consumer confidence and new home sales in the world’s largest economy soared to a six-year high, adding to yesterdays positive data it seems as though the US economy has finally burst back into life.

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