Pound Sterling to Swiss Franc (GBP/CHF) Exchange Rate Forecast: Franc Higher Despite SNB Threats, Pound Sheds 0.5%

The Pound Sterling to Swiss Franc (GBP/EUR) extended the day’s decline to over 0.5% on Tuesday as the British currency broadly softened in response to sub-par UK stats.

Pound Sterling to Swiss Franc (GBP/EUR) Exchange Rate Pressured

Below forecast UK industrial and manufacturing production data saw Sterling soften against the majority of its currency counterparts during the European session.

According to Reuters; ‘British industrial output unexpectedly fell in October as manufacturing was dragged down by a sharp fall in production of electronic products following a strong September. Output for industry overall fell 0.1 percent in October having jumped by a revised 0.7 percent in September […] Manufacturing output tumbled 0.7 percent – its biggest monthly decline since May – hit by a 4.5 percent fall in computer, electronic and optical products.’

Declines in the Pound were a little limited as the British Retail Consortium’s Like-for-Like sales report showed improvement.

The Pound Sterling to Swiss Franc (GBP/EUR) exchange rate fell by over 0.2% on Tuesday as a risk-off environment buoyed the safe-haven asset.

GBP/EUR Exchange Rate Trending Lower

Early in the European session the Pound Sterling to Euro (GBP/EUR) exchange rate shed 0.2%.

Yesterday’s concerning Chinese trade data and the belief that the Federal Reserve is moving closer to increasing interest rates created a risk off environment, which pushed safe-haven currencies like the Swiss Franc higher against their riskier peers.

The Franc was little effected by domestic employment stats on Tuesday.

Swiss employment data showed that the nation’s unemployment rate climbed to 3.2% from 3.1% (on an unadjusted basis) in November.

On a seasonally adjusted basis, the jobless rate fell from 3.2% to 3.1% last month.

As stated by RTT News; ‘The number of people out of work rose by 4,155 from the prior month to 136,522 in November. Compared to the prior year, unemployment decreased by 2,521 or 1.8%.’

Prior to the report’s release, the Swiss Franc was trending in a lower position against the US Dollar as yesterday’s domestic data continued to take a toll.

According to Investing; ‘On the macro front, consumer prices in Switzerland remained flat on a monthly basis in November, following a similar reading registered in October. Market expectations were for the consumer prices to fall 0.1%. Meanwhile, Swiss real retail sales rose 0.3% on an annual basis in October, after advancing by a revised 0.5% in the preceding month.’

SNB May Introduce Negative Rates, Swiss Franc to Euro (CHF/EUR) Cap in Focus

Meanwhile, demand for the Franc was also affected by speculation that the Swiss National Bank might introduce a negative interest rate in order to defend the 1.20 cap on the Swiss Franc to Euro exchange rate.

In the opinion of economist Jordon Rochester; ‘The SNB are in a trade-off here […] between a proactive decision of cutting rates before ECB action or kicking the can further down the road and saving ammunition in case they need to relieve pressure on the floor if the ECB does commence quantitative easing.’