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Pound Swiss Franc (GBP/CHF) Exchange Rate Steady as UK Manufacturing PMI Rises in February

February 21, 2020 - Written by John Cameron

GBP/CHF Exchange Rate Rangebound as Brexit Uncertainty Haunts UK Markets

The Pound Swiss Franc (GBP/CHF) exchange rate held steady today, with the pairing currently trading around 1.268fr following the release of the Markit services PMI for February, which fell came in at a strong 53.3, while the manufacturing PMI beat forecasts and rose to 51.9.

Tim Moore, the Associate Director at IHS Markit, was upbeat in his analysis, commenting:

‘The recent return to growth signalled by the manufacturing and services PMIs provides a clear indication that the UK economy is no longer flat on its back, with our GDP nowcast pointing to 0.2% growth through the first quarter of the year.’

Today also saw the release of the UK public sector net borrowing figure for January, which fell to a deficit of £-10.538 billion as Downing Street ramps up for its March budget.

Yael Selfin, Chief Economist at KPMG UK, comments:

‘Today’s data paints a mixed picture for public finances. With just two months to go until the fiscal year-end, overall borrowing for the fiscal year to March is projected to fall below £50 billion.’

‘Despite that relatively good news, if the Chancellor intends to stick to the current fiscal targets, he will have relatively limited room to increase spending compared to the ambitious objectives the government has set.’

The GBP/CHF exchange rate has remained subdued, however, as tensions between the UK and EU keep markets speculating over whether Britain will exit the ‘transition period’ without a deal.

CHF/GBP Exchange Rate Steady, Investors Flock to Safe-Haven Currencies

The Swiss Franc (CHF) has continued to benefit from its safe-haven status today, with China’s coronavirus epidemic leaving markets seeking out less risk-correlated currencies as the Chinese economy is expected to suffer in the first-quarter.

Head of Research at Pepperstone, Chris Weston, comments:

‘People are trying to get far away from the economic fallout that we might see from the coronavirus. You want your capital as far away from China as possible.

‘The sentiment continues to be ‘buy US assets’. Some people are saying if you want a safe-haven currency in the portfolio you have US Dollars now, over the Yen.’

However, some Swiss Franc investors are remaining cautious over rising concerns about the global economy due to China’s coronavirus epidemic.

GBP/CHF Forecast: Could Sterling Sink on No-Deal Brexit Fears?

Swiss Franc (CHF) investors will be awaiting next Friday’s release of the Swiss Real Retail Sales report for February. Any signs of improvement would prove CHF-positive.

Market risk appetite will continue to dictate the direction of the Swiss Franc next week, with any signs of easing fears over China’s coronavirus weakening the CHF/GBP exchange rate as investor’s appetite for riskier assets returns.

The GBP/CHF exchange rate will also continue to be driven by Brexit developments. Any signs of tensions rising between the UK and EU could weaken Sterling on heightened fears over a no-deal Brexit later on this year.

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