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Pound Swiss Franc (GBP/CHF) Exchange Rate Sinks as Swiss Retail Sales Improve

May 31, 2019 - Written by John Cameron

GBP/CHF Exchange Rate Falls despite Dovish Swiss Economic Outlook

The Pound Swiss Franc (GBP/CHF) exchange rate is down and is currently trading around 1.2645Fr at the time of writing.

The Swiss Franc (CHF) rose against the Pound (GBP) following the publication of the Swiss retail sales figures for April, which improved above the consensus of -0.8% to -0.7%.

However, these figures were weaker than last year’s, providing some doubt for traders in the health of the Swiss economy.

This has come after Ronald Indergand, the Swiss Government Economist, dovish said this week:

‘Our current view for below-average growth in Switzerland this year remains our base-case scenario. The general environment has stayed the same and in some cases has deteriorated.’

The Swiss Franc has also benefited from its safe-haven status, as the US-China trade war raged on this week, with one Chinese official labelling US actions as ‘naked economic terrorism’.

Dai Xianglong, the former Governor of the People’s Bank of China, however restored faith in a resolution between the two superpowers, saying:

‘Leaders of China and the U.S. will meet late next month in Japan and I hope there will be positive news [from the meeting].’

GBP/CHF Exchange Rate Falls as Brexit Fears Weigh Heavily on Sterling

The Pound failed to gain following the publication of the UK GfK consumer confidence figures for May, which rose to an eight-month high at -10.

Joe Staton, a GfK Executive, remained generally downbeat, however, saying:

‘Consumers will need to be convinced in heart, head and wallet that Brexit’s murkiness has finally come to an end.’

Today also saw the release of the UK consumer credit figures for April, which increased by £0.942bn.

However, with the uncertainty surrounding Brexit and the future leadership of the Conservative Party, Sterling traders have remained jittery on fears of a possible no-deal exit from the European Union.

Meanwhile the Confederation of British Industry (CBI) warned the Government of the dangers of a chaotic exist.

Director General Carolyn Fairbairn, commented:

‘Short-term disruption and long-term damage to British competitiveness will be severe if we leave without one. The vast majority of firms can never be prepared for no-deal, particularly our [small and medium-sized] members who cannot afford complex and costly contingency plans.’

GBP/CHF Outlook: Conservative Leadership and Brexit to Remain in Focus

Swiss Franc traders will be looking ahead to Monday next week for the publication of the Swiss consumer price index figures for May, which are expected to hold steady at 0.7%.

These will be followed by the Swiss SVME purchasing manager’s index figures for May.

Pound traders, meanwhile, will be looking to Monday’s Markit Manufacturing PMI figures for May, which are expected to ease, likely weakening the GBP/CHF exchange rate.

The GBP/CHF exchange rate is likely to remain subdued until Brexit and the uncertainty surrounding the Conservative leadership shows any signs of development.

The Pound could fall further if there is increasing signs of a hard-Brexiter leader, with Boris Johnson, the former Foreign Secretary, increasingly becoming the most favourable candidate.

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