The British Pound to Euro (GBP/EUR) and British Pound to Swiss Franc (GBP/CHF) exchange rates began Wednesday’s trading with a bang as the UK currency slipped majorly after UK wage growth and Unemployment Rate figures were published.
The UK was forecast to see a drop in the Unemployment Rate from 5.7% to 5.6%. However, the actual ecostat remained at 5.7%. Yet economists suggest that the above forecast 143K Employment Change figure allowed UK employment to hit a record 73.3%.
However, investors were more concerned with disappointing wage growth data. Weekly Earnings Excluding Bonuses failed to rise from 1.7% to 1.8% as forecast, instead dropping to 1.6% in January on the year. It got worse with Average Earnings Including Bonuses tumbling from 2.1% to 1.8% after predictions of a rise to 2.2%.
The weak wage data is expected to be another factor to interfere with the Bank of England’s (BoE) rate hike prospects in the near future.
Mizuho Bank Ltd’s Neil Jones stated: ‘The UK employment data was on the soft side, pushing the Pound lower. Wages are the biggest disappointment. It does add the notion that the UK can put on hold any rate hike for now.’
Meanwhile, Chancellor of the Exchequer George Osborne has still to give the last budget statement before the general election on Wednesday, which could be an event that sees the Pound experience further movement.
Frankfurt has seen some disruption on Wednesday with the European Central Bank’s inauguration of its new headquarters being met with 10,000 anti-capitalist protestors.
Blockupy spokesman Thomas Occupy stated: ‘The ECB is part of the troika, but it should not have the power to play an active role in politics. The ECB should just maintain our currency.’
The line between central banks and politics can play havoc with currencies and mixed with political uncertainty over whether Greece will remain in the Eurozone or not, pressure on the Euro exchange rate is mounting constantly.
ZEW Swiss Expectations Survey Offers Swiss Franc to Pound Sterling (CHF/GBP) and Euro (CHF/EUR) Exchange Rates Support
Meanwhile, the Swiss Franc was offered a little support on Wednesday after ZEW’s Swiss Economic Sentiment Survey improved from -73.0 in February to -37.9 in March. The figure was an improvement, but a little shy of the -12.75 forecast.
The negative reading shows that survey participants predicting a decline in the economic situation in the near future outnumber those forecasting optimism.
Credit Suisse commented: ‘Some of the index’s improvement this month probably has to do with the Euro-Franc rate, which appears to have levelled off at around 1.07.’
A fall in confidence was forecast after the Swiss National Bank (SNB) removed the cap between the Euro and the Swiss Franc (EUR/CHF) in January—a move which sent the Franc soaring.
However, the Swiss Franc to British Pound (CHF/GBP) and Swiss Franc to Euro (CHF/EUR) exchange rates could be in for some serious movement on Thursday when the SNB releases its interest rate decision.
British Pound (GBP) Exchange Rate Forecast: GBP/EUR, GBP/CHF
The British Pound to Euro (GBP/EUR) and British Pound to Swiss Franc (GBP/CHF) exchange rates could feel the impact of Bank of England (BoE) comments in the rest of the week, with Chief Economist Andrew Haldane expected to speak on Thursday.
Friday will see the release of UK Public Finances and Public Sector Net Borrowing figures which could have a moderate impact on the GBP/EUR and GBP/CHF exchange rates.
The British Pound to Swiss Franc (GBP/CHF) exchange rate is trending in the region of 1.4700. The British Pound to Euro (GBP/EUR) exchange rate is trading at 1.3819.
