Pound to Swiss Franc (GBP/CHF) Pares Gain ahead of BoE Carney’s Speech on Thursday
The Pound has enjoyed gains against the Swiss Franc (GBP/CHF) on Monday presently trading at 1.5356, as Sterling climbs following the conclusion of the Scottish referendum. The vote for independence had caused major volatility for the Pound in recent weeks as debate heated up. However, the close of the referendum signalled the end of speculation, and although UK politics may see some adjustment, the Pound has been allowed to gain some stability.
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The Pound to Swiss Franc exchange rate has reached session highs of 1.5366 versus lows of 1.5311 on Monday; however data publications this week may affect the GBP to CHF currency pairing. Wednesday will see the Swiss UBS Consumption Indicator Index which will highlight consumer spending in Switzerland.
Last week the Swiss National Bank (SNB) announced that they were willing to push borrowing costs into negative figures—meaning loan applicants would pay back less that they initially applied to borrow—in an attempt to keep the exchange rate down. The Swiss Franc is tied to the Euro (EUR) with the intention of keeping the ‘Swissie’ under 1.20 Euros.
Despite the SNB suggesting unconventional methods it is an attempt to control the growing threat of deflation within the Euro area. The central bank stated: ‘The SNB will continue to enforce the minimum exchange rate with the utmost determination.’
Conversely, the Pound is trading amid speculation that UK interest rates may increase in the near future, rescuing them from their current historical lows. Forex expert Athanasios Vamvakidis stated: ‘The macro-economic backdrop to the UK economy has been broadly supportive for the medium-term Sterling outlook. This has reinforced our view that the Bank of England will start hiking rates in early 2015.’
Bank of England Governor Mark Carney is scheduled to speak on Thursday in Wales at the Institute and Faculty of Actuaries General Insurance Conference. Investors are hoping that the topic of interest rate hikes may be discussed by the central bank Governor. Carney may offer support to Sterling if his statements are optimistic whilst the next Monetary Policy Committee (MPC) meeting will take place on October 9th.
Sterling, however, appears to be strengthening against other majors, despite trending lower in recent weeks. Industry expert Steve Barrow commented: ‘Against a range of currencies Sterling still seems to be pretty firm and deservedly so given where the UK is in the monetary cycle.’ The GBP to CHF exchange rate will await this week’s data and Carney’s statements to determine any major movement.
As the European session progressed on Tuesday the Pound to Swiss Franc (GBP/CHF) exchange rate shed 0.4%.
The British currency was trending in a softer position against the majority of its currency counterparts ahead of the week’s most influential UK news.
Although today’s UK public finance figures could have a modest impact on GBP/CHF trading, investors will be focusing on Thursday and BoE Governor Mark Carney’s speech. If the central bank chief adopts a hawkish tone the Pound could surge. However, if Carney expresses reluctance to raise rates amid stagnant wage growth, we may see the Pound trend lower towards the close of the week.
There are no Swiss reports to be aware of until tomorrow, when the UBS Consumption Indicator will be released.