July 23, 2018 - Written by James Fuller
STORY LINK Pound Sterling to Swiss Franc (GBP/CHF) Exchange Rate Dips on Brexit Concerns
Last week saw the Pound to Swiss Franc exchange rate open in the region of 1.3256 on Monday and close down lower at 1.3030 on Friday.
This progressive deterioration in the value of the Pound was caused by a series of poor UK data releases, starting off with Tuesday’s jobs market data.
Jobless claims rose in June and the pace of wage growth in May unexpectedly slowed; additional damage was caused by Wednesday’s disappointing inflation rate stats.
Rounded off with Thursday’s news of slowing UK retail sales activity, the Pound-damaging conclusion from economists was that an August Bank of England (BoE) interest rate hike was now in doubt.
The only notable Swiss news last week was a trade balance reading for June, which showed an expansion of May’s surplus from 1.24bn to 1.31bn.
Pound Sterling to Swiss Franc (GBP/CHF) Exchange Rate Slides on Brexit Committee Warning
The Pound (GBP) has slipped against the Swiss Franc (CHF) and other currency peers today, in the wake of a report criticising the lack of Brexit progress so far.
This Committee on Exiting the European Union has stated that matters previously thought to be resolved are actually still unsettled; Committee Chair Hilary Benn said:
‘Citizens’ Rights was one area of the Brexit negotiations marked as green in the March draft of the Withdrawal Agreement which implied that it was all sorted.
‘But the evidence we have heard suggests it is far from being finalised.’
Among other issues associated with the Brexit process, the rights of UK citizens living in the EU and vice versa is seen as a fundamental problem that must be solved before the October deadline.
Along with the mass disruption relocating citizens from both areas would bring, unresolved citizens’ rights issues could also put considerable strain on the NHS through the repatriation of elderly UK expats.
Swiss Franc to Pound (CHF/GBP) Exchange Rate Up 0.3% on Safe Haven Status
On a turbulent political start to the week, the Swiss Franc to Pound (CHF/GBP) exchange rate has traded at £0.7686, close to last week’s high of £0.7697.
This appreciation is mainly down to international news – with the US Dollar currently in low demand, the Swiss Franc has appreciated because of its comparatively ‘safer’ status.
The US Dollar has taken a tumble today because of a marked deterioration in the US-Iran relationship, following a heavily capitalised threat tweeted by US President Donald Trump.
For context, under the Obama Administration the US lifted sanctions on Iranian oil exports, but under President Trump these sanctions have been re-imposed following the US withdrawal from the Iran nuclear deal.
Iranian Supreme Leader Ayatollah Ali Khamenei has warned that Iran will endeavour to block all Persian Gulf oil exports if it cannot export the resource, which prompted the market-destabilising social media post from the US President.
GBP/CHF Exchange Rate Forecast: Can Pound Sterling Recover on BoE Speech?
The Pound (GBP) has a slim chance to rise against the Swiss Franc (CHF) this afternoon, when Bank of England (BoE) policymaker Ben Broadbent gives a speech.
Mr Broadbent will be speaking at a Society of Professional Economists event in London and could raise demand for the Pound by discussing BoE interest rate hikes.
If Mr Broadbent suggests that an August interest rate hike is likely, despite the poor run of UK data seen last week, then the Pound to Swiss Franc exchange rate could rise sharply.
Back in early July, GBP traders had been pencilling in an August interest rate hike and if it looks like these preliminary forecasts could be accurate then the Pound might appreciate.
The week’s first major Swiss data will be an economic sentiment index reading for July, out on Wednesday morning.
This measurement threatens to bring Franc to Pound exchange rate losses, assuming that it shows a forecast-matching decline from 8 points to 5.1.
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TAGS: Swiss Franc Forecasts