The Pound Sterling to Swiss Franc (GBP/CHF) exchange rate has been trending higher in the second half of Thursday’s session after the Swiss National Bank (SNB) warned that the Swiss economy could enter a period of deflation. The SNB expect consumer price growth to move from 0.2% to -0.1% next year.
Industry expert Julien Manceaux commented: ‘Given the moves observed on the oil market, and even taking into account a CHF appreciation against the USD, we think that this forecast underestimated the risks of deflation and maintain our own forecasrt at -0.5% for Swiss inflation in 2015. The SNB inflation forecast can therefore be taken as a sign that the SNB is not yet ready to take further measures.’
Earlier… The Pound Sterling to Swiss Franc (GBP/CHF) exchange rate sank during Thursday’s European session after the Swiss National Bank (SNB) decided to keep interest rates on hold at 0.00%.
Meanwhile, the Bank of England (BoE) announced that it plans to be more transparent and publish its full meeting minute recordings eight years after the gatherings take place—an event that could see Sterling strengthen.
SNB Defends Swiss Franc (CHF) Exchange Rate Cap
The Swiss National Bank (SNB) has previously stated that it would be willing to cut interest rates into negative figures to protect the ‘Swissie’s’ cap against the Euro. The SNB will defend the currency cap by any means as it prevents the need to tighten monetary conditions.
SNB Chairman Thomas Jordan stated: ‘With interest rates at zero, the minimum exchange rate is the key instrument to avoid an undesirable tightening of monetary conditions. This is especially important at the moment, as upward pressure on the Swiss Franc has intensified once again.’
Furthermore, the SNB upped its growth forecast for 2014 and offered the Swiss Franc some support. The central bank forecasts growth of between 1.5% and 2.0% this year and ‘about 2%’ for 2015.
Meanwhile, the UK saw the release of RICS House Price Balance report. The pace of house price growth sank in November from 20% to 13%, an 18-month low and defying economists’ forecasts of a drop to 15%. The data pressured the Pound Sterling exchange rate lower.
RICS economist Simon Rubinsohn commented: ‘The stamp duty reform could reverse the softer trend in buyer enquiries that has been visible in recent months.’
Bank of England (BoE) Offers Transparency – Pound Sterling (GBP) Exchange Rate could Gain
Also on Thursday, the Bank of England took an interesting turn in its privacy measures by making another step toward increased public visibility. The BoE will now release its full meeting minutes eight years after the meeting takes place, while also trying to cut its meetings down to eight a year.
BoE Governor Mark Carney has led the campaign for more transparency and suggests they are ‘the most significant set of changes to how we present and explain out interest rate decisions since the Monetary Policy Committee [MPC] was formed in 1997.’
Carney continued: ‘These changes will enhance our transparency and make us more accountable to the British people.’
The review into the new protocol was conducted by Kevin Warsh, former US Federal Reserve Governor. Mr Warsh believes in the benefits of clearer communication between the central bank and the public, stating: ‘Transparency is the watchword.’
Pound Sterling to Swiss Franc (GBP/CHF) Exchange Rate Forecast
The Pound Sterling to Swiss Franc (GBP/CHF) exchange rate may have a quiet end to the week after Thursday’s trading with no other influential domestic data expected from either the UK or Switzerland. However, any central bank comments could cause GBP/CHF movements and any developments in the Eurozone or commodity prices could also affect the Pound Sterling to Swiss Franc (GBP/CHF) currency pair.
The Swiss Franc to Pound Sterling (CHF/GBP) exchange rate is presently trending higher with market movement of +0.36% at 0.6613. The Pound Sterling to Swiss Franc (GBP/CHF) exchange rate is trading in the region of 1.5132.
