Pound Sterling Swiss Franc (GBP/CHF) Exchange Rate Muted as BoE Upgrades Growth Forecast

May 2, 2019 - Written by John Cameron

STORY LINK Pound Sterling Swiss Franc (GBP/CHF) Exchange Rate Muted as BoE Upgrades Growth Forecast

Pound Swiss Franc (GBP/CHF) Exchange Rate Flat as BoE Leaves Interest Rates Unchanged

The Pound Sterling Swiss Franc (GBP/CHF) exchange rate remained muted and the pairing is currently trading at an inter-bank rate of 1.3288Fr.

Through a unanimous decision from policymakers, the Bank of England (BoE) left interest rates unchanged at 0.75%.

The central bank upgraded its growth forecast to 1.5% economic growth for 2019, up from February's prediction of 1.2% growth.

However, Brexit still remains a major influence on how the BoE will react as Governor Mark Carney stated during his press conference that while global tensions are easing, ‘domestic tensions remain.’

In its Monetary Policy summary, the bank warned:

‘The economic outlook will continue to depend significantly on nature and timing of EU withdrawal, in particular the new trading arrangements between the European Union and United Kingdom, whether the transition to them is abrupt or smooth, and how households, businesses and financial markets respond.’

Sterling (GBP) Flat despite Rise in UK Construction

The UK construction PMI rose to 50.5 in April from 49.7 in March as the survey revealed that residential work expanded at the fastest pace in four months.

House building was the strongest performing area, with a resilient demand and a strong flow of new buyers.

However, commercial work remained weak continuing the weak trend seen during the first quarter of 2019.

Commenting on this, Duncan Brock, Group Director at the Chartered Institute of Procurement and Supply said:

‘The strongest rise in residential building since December 2018 was the only saviour of a sector otherwise heading for contraction again this month as deferred client decisions continued to impact on larger commercial and infrastructure projects, throwing the industry off-balance.’

Disappointing Retail Sales Weighs on the Swiss Franc (CHF)

On Thursday the Swiss SVME PMI slipped below forecast to 48.5 in April from 50.3 in March.

This was the first time since December 2015 that manufacturing activity has fallen into contraction territory.

Meanwhile, March’s real retail sales slipped by an annual rate of -0.7% compared to the previous month when sales remained stagnant.

Sales declined at the fastest pace in six months, which likely weighed on the Swiss Franc.

Pound Swiss Franc Outlook: Will the GBP/CHF Exchange Rate Fall on Better-than-Forecast Swiss Inflation?

Looking ahead to Friday the Swiss Franc (CHF) could rise against the Pound (GBP) following the release of the Swiss Consumer Price Index (CPI).

If CPI rises higher-than-forecast in April, it is likely that sentiment in the Swiss Franc will rise.

Meanwhile, the UK services PMI is also due for release on Friday, which could weigh on Sterling.

If April’s PMI remains in contraction territory for the second consecutive month, the Pound Sterling Swiss Franc (GBP/CHF) exchange rate may slide.

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TAGS: Pound Swiss Franc Forecasts