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GBP CHF Exchange Rate Trends Tightly as Investors Muse Mixed UK GDP Stats

February 22, 2017 - Written by Tim Boyer

GBP Demand Limited Today as Annual UK GDP Revised Down

The Pound to Swiss Franc exchange rate has been inconsistent today, with Sterling alternately making marginal gains and fractional losses in the pairing.

UK news has focused on the release of second estimates for Q4 GDP growth rates, which have shown a rise on the quarter but an annual downward revision.

While the quarterly rise was taken as a sign of UK economic resilience, Pantheon Macroeconomics Chief UK Economist Samuel Tombs has stated;

‘Overall, the dominant services sector continued to grow steadily, due in part to continued growth in consumer spending, although retail showed some signs of weakness in the last couple of months of 2016, which has continued into January 2017’.

Other UK data showed business investment falling sharply in Q4, which was attributed to uncertainty about how UK-EU negotiations will turn out in the future.

Future GBP Demand Tied to Article 50 Bill, Chance of Amendments

Developments in the House of Lords before the end of the week could push the Pound up against the Franc more decisively, as peers continue to debate the Article 50 bill.

With the bill now onto the ‘committee stage’, amendments are due to be proposed and voted on.

If any amendments do make the final cut, then the Pound could rally against the Franc, due to hopes that the UK’s exit from the EU will not be as tumultuous as first thought.

CHF Fails to Rise on Weak Gold Prices, despite Sentiment Score Increase

The Swiss Franc’s failure to rise against the Pound today has come from weak gold prices, which have prevented any real positive effects from recent Swiss domestic data.

As well as Tuesday’s Swiss trade balance rising from 2.7bn to 4.7bn, Wednesday has brought a jump in the February economic sentiment index from 18.5 to 19.4.

CHF Predicted to Struggle if GDP Figures Drop Next Week

The next Swiss data to watch out for is Thursday’s industrial production printing for Q4, which previously posted annual growth of 0.4%.

Major Swiss news after Thursday isn’t due until February 28th and March 2nd, when KOF leading indicators and Q4 GDP growth rate stats are due.

Annual GDP previously grew by 1.3% but no quarterly movement at 0% was recorded, so consistent rises in both fields could be enough to secure a Franc rise against the Pound.
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