Currency News

Daily Exchange Rate Forecasts & Currency News

Pound (GBP) to Swiss Franc (CHF) Exchange Rate Weakened; UK Awaits Data

July 9, 2014 - Written by Frank Davies

The Pound to Swiss Franc exchange rate has softened on Wednesday currently trading at 1.5278. Both the Pound and the Franc have been struck by disappointing data this week, with Sterling flikely to be affected by further significant data releases tomorrow.

Tuesday was a disappointing day for the Swiss Franc and the Pound by way of data publishing. The Swiss Consumer Price Index was formerly 0.2% in May and was predicted to stagnate at that figure; instead it fell to 0.0% in June. Furthermore, Retail Sales took a staggering dip from April’s former figure of 0.8%, to -0.6% in May.

The Swiss Franc has fluctuated on Wednesday, ranging from highs of 1.1218 and lows of 1.1188. With disappointment stemming from Tuesday’s unexpected results, speculation has arisen about the safe haven currencies 1.20 Euro cap. The 1.20 Euro limit was placed on the Swiss Franc almost three years ago, after investors were attracted to the safe haven Franc which ultimately damaged Swiss export prospects. However, with figures falling unexpectedly, deflation fears become more prominent.

Economists, Alessandro Bee, stated: ‘As long as inflation is positive, the inflationary fears of the SNB are contained.’ However Bee also speculated that as the health of the global economy improves amid the continued Iraq and Ukraine conflicts, there could be a surge in oil prices and as a result would increase inflation. The Swiss National Bank however have expressed that they are prepared to extend their power with further measures if necessary.

The Pound has softened slightly against the US Dollar in the aftermath of less than favourable results on Industrial and Manufacturing Production data. The UK is awaiting the release of a mass of data on Thursday to determine any market movement for the Pound. The Pound has been performing strongly in 2014, and reached its pinnacle against the US Dollar on July 7th. However speculation that the Pound will continue to gain is causing debate.

Goldman Sachs economist, Kevin Daly, commented: ‘The currency is up on a trade-weighted basis almost 10% in the last year. That leads us to expect that while growth will remain strong, it will moderate to some extent as the year goes through.’ However after a string of positive UK data causing a boost for the Pound, Sterling has slipped this week. Wednesday has seen a fall in UK Halifax House Price data which has failed to meet forecasts. The figure fell from 4.0% in May to a very disappointing -0.6% in June, bypassing forecasts of a dip to a gentler -0.3%, MoM.

Foreign exchange expert Marshall Gittler commented: ‘The last couple of days has seen some negative data, which is leading speculators to trim their long bets in the Pound. But the long term outlook remains good and buying Sterling on the back of good fundamentals is the only game in town.’ Moreover economists are speculating that a blip in bad data won’t affect the Pound for long, Citibank currency expert Valentin Marinov suggested: ‘The key question is to what extent the data should be seen as a precursor of potential loss of growth momentum further down the road. We do not think that is the case, however.’

With the Pound proving strong against major currency peers, Thursday will be an interesting day for the fate of Sterling. Previously interest rate hike talks by the Bank of England have caused movement for the Pound, so it’s expected that tomorrow will have a similar effect. The Pound will be subject to fluctuation tomorrow with the release of influential data, whilst the Franc could be altered by the European Central Bank’s Monthly Report.
Advertisement

Like this piece? Please share with your friends and colleagues:

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.


TAGS: Pound Swiss Franc Forecasts

Comments are currrently disabled