GBP/CHF Exchange Rate Muted as Sterling Rally Falters
Updated 5/6/18: After initially surging higher on Tuesday morning, the Pound Swiss Franc (GBP/CHF) exchange rate began to trade in a narrow range by the end of the session as Sterling’s rally ran out of steam.
Meanwhile the appeal of the Swiss Franc (CHF) was bolstered throughout the day as markets braced for the release of Wednesday’s inflation figures.
Original article continues below:
GBP/CHF Exchange Rate Rallies as BoE rate Expectations Buoyed by UK Services PMI
The Pound Swiss Franc (GBP/CHF) exchange rate is strengthening today as an uptick in the UK’s services PMI helps to bolster hopes of a UK rate hike later in the year.
At the time of writing GBP/CHF exchange rate is up nearly 0.3%, with the pairing rallying from this week’s early losses.
Pound (GBP) Exchange Rate
The Pound Sterling (GBP) exchange rate surged this morning as markets welcomed the release of the UK’s latest Services PMI.
Data published by IHS Markit, revealed activity in the UK’s all-important service sector grew at a faster pace than expected in May, with the index jumping from 52.8 to 54.0, easily outpacing forecasts of a more modest rise to 53.0.
Combined with a stronger-than-expected manufacturing PMI as well as robust activity in the UK’s construction sector this indicates the UK economy is recovering from its slow start top the year.
Analysts suggest this may leave the door open for the Bank of England (BoE) to still target a rate hike in the second half of 2018.
Chris Williamson, Chief Business Economist at IHS Markit, said:
‘The signs of economic growth rebounding in the second quarter will likely up the odds of the Bank of England hiking interest rates again in coming months, likely August.’
However Williamson warning this could easily change once again as he added: ‘but with the forward looking indicators suggesting that the economy could relapse, a rate rise is by no means assured.’
Swiss Franc (CHF) Exchange Rate Subdued as Markets Await Swiss Inflation Figures
Meanwhile markets are bracing for a potential upswing in the Swiss Franc (CHF) exchange rate on Wednesday following the release of Switzerland’s latest CPI figures.
The data is expected to show inflation ticked higher in May, rising from a seven-year high of 0.8%, to 0.9%, its highest levels since 2011.
The rise in inflationary pressure is likely to be welcomed by investors as positive step towards the Swiss National Bank (SNB) ending its ultra-loose monetary policy.
GBP/CHF Exchange Rate Forecast: Further Slide in Swiss Unemployment Likely to Bolster the Franc
Looking ahead the GBP/CHF exchange rate could also be driven this week by the publication of Switzerland’s latest unemployment figures.
Economists forecast Switzerland’s jobless rate will have fallen from 2.7% to 2.5% in May, its lowest levels since 2011.
Meanwhile movement in the Pound (GBP) exchange rate is likely to dictated by comments from BoE policymakers in a number of speeches to be delivered this week.
This could see Sterling continue to rally if policymakers appear upbeat in the wake of the UK’s recent PMI figures.
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