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GBP CHF Exchange Rate Rallies on Surprise UK Services Result

April 5, 2017 - Written by Tim Boyer

The British Pound to Swiss Franc exchange rate trended relatively flatly on Thursday afternoon. The Franc has been relatively limp throughout the day and was little changed after the publication of the day’s inflation stats.

Friday’s session will see the publication of UK trade data for February, as well as Switzerland unemployment figures for March. GBP/CHF looks on track to end the week below its opening levels.

[Previously updated 06/04/2017]

March’s Swiss consumer price index surprised to the upside to hold steady at 0.6% on the year, offering some support to the Swiss Franc.

Even so, the Pound Swiss Franc exchange rate trended in a narrow range at 1.2536 during Thursday’s European session.

[Previously updated 05/04/2016]

GBP Demand Advances on Forecast-Beating Services Stats

The Pound to Franc rate has risen by 0.4% today, thanks to UK services PMI figures for March. Forecasts had been for a rise from 53.3 to 53.5, making the actual rise to 55 a strongly supportive result.

As well as beating predictions, this result has also cancelled the PMI slowdown streak seen in the UK’s manufacturing and construction PMIs earlier this week.

Other UK news has seen talk of a Brexit ‘transitional deal’. Designed to ease the move from EU membership to national independence, this designated period would likely reduce wild Pound fluctuation during the Brexit process.

GBP Predictions: Will BoE be Pressured by Upcoming Inflation and Wage Data?

The last major UK data this week will be trade balance figures on Friday, which could worsen the GBP CHF exchange rate if the current deficit widens instead of reducing.

Next week’s main focus will be on potential inflationary pressures, which will have wider implications for the Bank of England (BoE).

Tuesday will bring March’s inflation rate stats, while Wednesday will see average wage growth announced. If wage growth slows and inflation continues to rise, then the BoE could be placed under greater pressure to raise UK interest rates.

Problematically, however, the BoE has its hands partly tied because raising inflation would put further hardship on those struggling with slow wage growth.

The next BoE rate decision isn’t due until May, so any comments from policymakers before then will likely shift Pound demand accordingly.

CHF Losses to GBP Stem from Unstable Gold Prices

The Franc’s gradual decline against the Pound this week has come from commodity price changes, specifically when it comes to gold.

Although troubling global events led to a temporary gold price rise on Tuesday, the cost has since dropped back to Monday’s levels.

While it has failed to boost Franc demand, recent Swiss data has nonetheless been positive. Retail sales have risen on the year in February, while a March manufacturing PMI has also shown increasing activity.

CHF Predicted to Rally if US Turbulence Drives Gold Costs Up Again

Gold prices are likely to remain a strong source on influence on the Swiss Franc this week, with the possibility of rising US economic uncertainty meaning traders could again flock to the precious metal.

When it comes to data, the Franc could be moved by inflation and unemployment rates on Thursday and Friday.

Inflation is forecast to slow, but the unemployment rate figures could strongly support the Franc if they show a drop from 3.6% to 3.4% as forecast.
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