Pound Sterling to Swiss Franc (GBP/CHF) Exchange Rate Stronger Despite Swiss GDP
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On Friday the Pound was supported against the majority of its currency counterparts by a run of better-than-predicted economic reports for the UK.
The UK’s Hometrack Housing Survey for August showed a 0.1% month-on-month gain and a 5.5% year-on-year advance while the GfK Consumer Confidence survey rallied from -2 in July to 1 last month.
Later in the European session the UK’s Nationwide House PX figures detailed a 0.8% month-on-month climb and an annual increase of 11.0%.
The Pound began Monday trading in a stronger position against several of its major rivals, but the currency fluctuated following the publication of mixed UK reports.
In a sign that the UK’s economic recovery is losing momentum in several key areas, the nation’s Manufacturing PMI fell to a 14 month low of 52.5 in August – defying expectations for a reading of 55.1.
Markit economist Rob Dobson said of the report; ‘it therefore looks as if manufacturing will provide a lesser contribution to the UK economic growth story in the third quarter than at the start of the year. With the market’s focus firmly on the Bank of England for any signal on the timing of the unexpected move in interest rates, the Monetary Policy Committee will likewise keep a watchful eye on the other sectors of the economy for signs they can offset the slowdown in manufacturing.’
However, any Sterling losses were limited as a report showed that the level of mortgage approvals issued in the UK didn’t decline by as much as expected in July.
The number of approvals had been expected to drift from a negatively revised 67.1K to 66.0K, but they actually came in at 66.6K.
The USD/CHF pairing hit a low of 0.9175 and with US markets closed for a national holiday, additional fluctuations are likely to be limited.
The Pound Sterling to Swiss Franc (GBP/CHF) hit a high of 1.5286
The British currency managed to maintain a stronger position against its Swiss peer thanks to a less-than-stellar Manufacturing PMI for Switzerland.
The index tumbled from 54.3 in July to 52.9 in August.
Economists had anticipated a reading of 53.3.
The appeal of the Franc was also compromised over the weekend by comments issued by Swiss National Bank Chairman Thomas Jordan.
Jordan asserted that the central bank is prepared to take steps to protect the domestic currency. He stated; ‘The Franc is still highly valued. Enforcing the minimum exchange rate of 1.20 is absolutely central to ensure adequate monetary conditions in Switzerland. We continue to stand ready [to defend the cap] by unlimited currency purchases if necessary.’
He continued; ‘Macroeconomic risks have increased over the last weeks. New geopolitical risks have emerged and we’ve seen weaker than expected international macro data, mainly in Europe and Latin America.’
In Jordan’s opinion ‘there is no doubt’ that the economic outlook for Switzerland has dimmed.
Pound Sterling to Swiss Franc Exchange Rate Forecast
The GBP/CHF exchange rate could fluctuate over the course of this week in response to news from the UK (including the Bank of England’s interest rate decision and the UK’s Services/Construction PMI. Switzerland’s growth report for the second quarter, due out on Tuesday, is also likely to inspire GBP/CHF volatility.
Year-on-year growth of 1.5% has been forecast for the second quarter. This would be down from annual growth of 2.0% in the first quarter.
The Swiss Franc has tumbled versus the majority of its major peers on Tuesday morning after Gross Domestic Product data left a lot to be desired.
The quarter-on-quarter Swiss Gross Domestic Product was forecast to grow by 0.32% having shown a growth of 0.5% previously. The actual data, however, saw a flat line 0.0% figure. The year-on-year GDP was forecast to have grown by 1.5% after the previous revised figure of 2.1%. The actual data saw a disappointing growth of 0.6%.