GBP/CHF Relatively Static after Mixed Bag of Swiss Ecostats

June 9, 2015 - Written by Frank Davies

STORY LINK GBP/CHF Relatively Static after Mixed Bag of Swiss Ecostats

GBP/CHF Trending in Narrow Range

The Pound remained in a tight range against the Franc on Tuesday after a wealth of Swiss ecostats emerged. It was a mixed bag of results for the Swiss nation which began with the non-seasonally adjusted Swiss Unemployment Rate falling from 3.3% to 3.2% in May. In comparison the seasonally adjusted figure remained at 3.3%. Next in line was the Swiss Consumer Price Index stat which slipped from -1.1% to -1.2% in May on the year, rather than the -1.3% expected. The month of May registered 0.2% growth instead of the 0.1% estimate after April’s -0.2% reading. The Swiss EU Harmonised CPI slipped from -0.8% to -0.9% on the year in May. However, the Franc has experienced some popularity in recent weeks as the situation between Greece and its creditors continues. However, there’s the risk that an amicable decision between the parties or Greece leaving the Eurozone entirely could play havoc with the Franc’s exchange rate.

Strategist David Bloom commented: ‘We have our doubts that Euro/Swiss Franc will push higher on a sustained basis should Greece secure an agreement with its creditors. In fact, the options market hints at a greater fear factor that Euro/Swiss Franc could fall sharply on a ‘Grexit’ scenario. Switzerland’s persistent current account surplus creates ongoing demand for the Franc, especially while global growth prospects are so poor.’

Franc More Popular than the Yen?

It also appears that while both are safe-haven assets, the Franc has eclipsed the Yen in popularity in recent weeks. Fears surrounding extra stimulus measures by the Bank of Japan are likely to cause a decline in investor sentiment as the nation struggles to reach its somewhat ambitious inflation target.

Strategist Niels Christensen commented: ‘There is no doubt that between the Yen and the Swiss, the Yen has lost out. In a risk-off environment, especially on worries about Greece, we are not seeing as much of a reaction from the Yen as we are seeing for the Swiss Franc.’

UK Trade Deficit Narrows, Pound Fluctuates

Meanwhile, the UK recorded an impressive decline in its trade deficit in April. The ecostat registered a fall from -£3.093B to -£1.202B, rather than softening to the estimated -£2.600B. A leap in Britain’s exports helped to narrow the trade balance which managed to reach its smallest level in a year. Meanwhile, Wednesday could be another influential day for the Pound exchange rate with the release of the UK’s industrial and manufacturing sector data.

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