Pound Sterling (GBP) Exchange Rate Rallies on UK Data
On Monday the UK’s Manufacturing PMI helped the Pound Sterling to Swiss Franc (GBP/CHF) exchange rate strengthen and the pairing achieved a high of 1.5455.
Meanwhile, the Euro to Swiss Franc (EUR/CHF) exchange rate softened slightly following the publication of reports for both Switzerland and the Eurozone.
The GBP/CHF pairing rallied by over 0.2% during the European session as the UK’s Manufacturing PMI climbed to a three-month high instead of declining as expected.
The report showed a decline in overseas demand but a pick-up in domestic conditions and indicates that the UK’s manufacturing sector got off to a solid start as the fourth quarter began.
In the view of David Noble of the Chartered Institute of Procurement & Supply; ‘With new export business declining, it was the UK picking up the new business tab, as the Eurozone continued to experience weakened economic growth with the added punch of unfavourable exchange rates. […] The sector also experienced a rise in employment levels, especially in SMEs. As demand increased, so SMEs reacted to the changing landscape with a more agile response to developing employment capacity, whereas larger companies kept their staffing levels steady.’
After the data was released the Pound broadly strengthened, gaining on peers like the Swiss Franc, US Dollar and Euro.
Swiss Manufacturing at 6-Month High
However, GBP/CHF gains were tempered as Switzerland released its own positive PMI.
The nation’s SVME Purchasing Managers Index for October advanced from 50.4 to 55.3. A more moderate increase to 51.3 had been expected. This marked the strongest manufacturing growth for six-months.
Switzerland’s report caused modest fluctuations in the Euro to Swiss Franc (EUR/CHF) exchange rate as trading continued, although the pairing was largely trending around the day’s opening levels.
Demand for the Euro was also undermined by some negative revisions to Markit Manufacturing PMI’s for the Eurozone and its largest economies.
The index for Italy returned to contraction territory while PMI’s for both Germany and the Eurozone as a whole were cut from initial estimates.
In a statement Markit observed; ‘The Eurozone manufacturing sector remained in a state of near-stagnation in October, as weak demand continued to restrict growth of both output and employment across the currency union. National PMI data again highlighted the ongoing performance disparities between countries.’
The Euro to Swiss Franc exchange rate hit a low of 1.2049.
However, EUR/CHF declines were limited as investors hedged their bets ahead of the Swiss National Bank’s gold referendum.
GBP/CHF, GBP/EUR Exchange Rate Forecast
Swiss reports to be aware of this week include tomorrow’s UBS Real Estate Bubble Index for the third quarter, Wednesday’s Consumer Price Index and Thursday’s SECO consumer Confidence gauge.
The week concludes with Swiss unemployment figures and the nation’s retail sales report.
Investors with an interest in the Pound to Swiss Franc (GBP/CHF) exchange rate will also be focusing on the UK’s Construction/Services/Composite PMI’s, the British Retail Consortium’s Shop Price Index, Manufacturing/Industrial Production figures, the NIESR GDP estimate for October and trade balance numbers.
Of course, Pound movement could also be occasioned by the Bank of England’s interest rate decision and speeches to be given by several of the central bank’s officials.
Meanwhile, Euro to Swiss Franc (EUR/CHF) exchange rate volatility could be on the cards following the release of the Eurozone’s Producer Price Index, final Services/Composite PMI’s for the Eurozone and its largest economies, the currency bloc’s retail sales report, German factory orders stats, Construction/Retail PMI and German trade balance numbers.
The European Central Bank is scheduled to deliver its interest rate decision on Thursday. While the central bank is unlikely to adjust interest rates, it could offer some hints regarding the introduction of full-scale quantitative easing measures.
If the ECB does decide to purchase government-backed securities in an attempt to shore up the Eurozone’s recovery, the Euro could post broad-based declines.
Swiss Franc (CHF) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
, Swiss Franc,1.5414,
Euro,, Swiss Franc,1.2054,
US Dollar,, Swiss Franc, 0.9644,
Australian Dollar,, Swiss Franc, 0.8392,
New Zealand Dollar,, Swiss Franc,0.7476,
Canadian Dollar,, Swiss Franc,0.8530,
[/table]
