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Pound Swiss Franc (GBP/CHF) Exchange Rate Dips as UK Public Sector Borrowing Balloons to Four-Year High

July 19, 2019 - Written by John Cameron

GBP/CHF Exchange Rate Eases as Brexit Woes Rise as UK Budget Deficit Increases

The Pound Swiss Franc (GBP/CHF) exchange rate fell eased by over -0.2% today, leaving the pairing fluctuating around 1.229CHf on the interbank market.

The Pound (GBP) fell against the Swiss Franc (CHF) today following the publication of the UK Public Sector Net Borrowing figures for June.

These rose above forecasts and ballooned to a four-year high from £3.822 billion to £6.500 billion.

Analysts at EY Item Club commented:

‘The outlook for fiscal policy was already uncertain because of the extension of Brexit until 31 October, in addition to the imminent change of Conservative leader and prime minister.’

‘Much will depend on whether the economy can shrug off its current weakness, as well as on Brexit developments. It will also be influenced by any changes to fiscal policy by the new prime minister and chancellor.’

The Swiss Franc, meanwhile, has continued to benefit from yesterday’s Swiss trade balance figures for June.

These improved above consensus, rising to 4,096 million.

GBP/CHF Exchange Rate Dips as Brexit Remains in Focus

In political news, last night saw the success of an amendment in the House of Commons to prevent the future Prime Minister suspending Parliament to push through a no-deal Brexit.

The vote passed by an impressive 41-vote majority.

However, there were 17 Tory rebels which also backed the measure.

Philip Hammond, the Chancellor of the Exchequer, hit out in a thinly veiled statement that hinted at Boris Johnson, saying:

‘If they are genuinely seeking a deal, then they have my full support. If not, I’ll fight no deal every inch of the way.’

However, with this week’s upbeat economic data, including increased average earnings, record low unemployment levels, and improving retail sales in June, UK markets are relatively calm today.

GBP/CHF Outlook: No-Deal Brexit Comments to Weaken Sterling?

As there are no Swiss economic data releases next week, traders will instead be keeping a close eye on global economic and political developments.

The Swiss Franc is a safe-haven currency, so any indications of an increasing risk-off attitude between the US and China could provide some support for the Swiss currency.

The UK’s data calendar is also quiet next week, with the most notable releases being the CBI Industrial Trends Survey for July on Monday, and the BBA Mortgage Approvals for June on Wednesday.

Tuesday’s speech from the Bank of England’s Andrew Haldane, the bank’s Chief Economist, could provide some movement for the Pound.

If Mr Haldane provides any dovish statements on the UK economy, we could see the GBP/CHF Exchange rate begin to sink.

Brexit will remain in focus next week.

Any further comments in favour of a no-deal Brexit from either Tory leadership candidate would prove Pound-negative.

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