The Pound Sterling to Swiss Franc (GBP/CHF) exchange rate weakened on Wednesday following the release of weaker-than-forecast economic data out of the UK.
The Pound Sterling to Swiss Franc (GBP/CHF) exchange rate fell to a session low of 1.4687
Signs that the Eurozone economy is beginning to improve supported the Swiss Franc and were the main reason why Swiss economic expectations improved in March. The 19-member currency bloc is the Alpine nation’s biggest trading partner so any signs of improvement are a positive.
According to the ZEW institute and Credit Suisse Group, the index of investor and analyst expectations increased from the -73 figure recorded in February to -37.9 in March.
Last month’s decline was the biggest fall ever seen and was a result of the Swiss National Bank’s shock decision to ditch the Franc’s peg with the Euro. Despite the improvement, the negative number shows that more participants expect the nation’s economic outlook to worsen.
“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,” said Credit Suisse.
Euro (EUR) exchange rate strengthens on positive data
Data out of the Eurozone also aided the Franc against the Pound as it showed that the region’s trade surplus rose strongly on an annual basis in January. The Eurozone trade surplus grew to €7.9 billion from the €0.1 billion recorded in the previous year. Exports held steady but imports fell by 6%.
Another report showed that Eurozone construction output increased for a second straight month in January, adding to hopes that the currency bloc’s economy is beginning to improve.
Output in the construction sector climbed 1.9% month-on-month in January, much faster than December’s 0.2% increase, which was revised from a 0.8% decline. In November, production had fallen 0.4%.
The biggest increases in construction production across the EU were recorded in Germany, Slovenia and Romania.
The Pound Sterling weakened against all of its major peers and slipped to a new five-year low against the US Dollar due to the release of weaker-than-forecast wage growth data.
According to the Office for National Statistics (ONS), average earnings including bonuses rose by 1.8% in the three months to January, disappointing expectations for a rise of 2.2%. Earnings excluding bonuses saw wages rise by 1.6%, below expectations for a rise of 1.8%.
The disappointing data increased speculation that the Bank of England will not raise interest rates anytime soon.
