Wednesday’s trading session saw the Pound to Swiss Franc exchange rate open around 1.3090 and closed down lower at 1.3063.
While a relatively minor shift, this GBP/CHF exchange rate drop was indicative of a week of poor pairing movement.
Following on from Tuesday’s slowing UK wage growth figures, Wednesday saw the release of similarly Pound-damaging inflation rate stats.
These showed a slowdown in month-on-month price growth during June and an expected year-on-year rise from 2.4% to 2.6% failed to materialise.
GBP/CHF Exchange Rate Slides as UK Retail Sales Slowdown Causes BoE Rate Hike Panic
The Pound Sterling to Swiss Franc exchange rate (GBP/CHF) has fallen sharply today, dropping by -0.3% in the pairing.
This is down to earlier UK retail sales data for June, which has shown that sales activity slowed by more than expected for the month-on-month and year-on-year readings.
These ecostats have panicked Pound Sterling traders, who are worried that there may be no Bank of England (BoE) interest rate hike in August after the recent run of bad data.
Looking at reasons for the BoE to resist raising interest rates in August, Capital Index Research Director Kathleen Brooks said:
’ Although retail sales figures can be volatile, there is a growing sense that the UK economy is slowing down sharply, and with the political backdrop deteriorating, the BoE needs to have a pretty solid reason for hiking rates when it meets next month.
‘The details of the report are worth noting. Declines in UK sales last month were broad based with clothing and household goods leading the way.
‘Not even the internet could boost the retail sales figures: non-store retailing saw volumes fall by 1.4%, and the annual rate for non-store or internet sales retreated to 9.8% in June, compared with 16.1% in May.’
Echoing Ms Brooks’ sentiments, Markets.com Chief Market Analyst Neil Wilson said:
‘Retailers can always find ways to blame the weather and this time it’s the heatwave that can be blamed for a dismal performance by the UK consumer in June.
‘That was a terrible set of retail sales figures which will do nothing to persuade the BoE to hike in August.’
Not every economist jumped on the cautious bandwagon, however; Hargreaves Lansdown Senior Economist Ben Brettell said:
‘On the face of it, today’s retail sales data could look disappointing. But the monthly data is notoriously volatile, and trend-spotters would do well to look at the quarterly figures.
‘Despite a disappointing month, sales grew 2.1% over the three months to June, which was the strongest since 2004.’
Swiss Franc to Pound (CHF/GBP) Exchange Rate Rises after Finance Minister’s Remarks
The Swiss Franc (CHF) has advanced against the Pound (GBP) and other peers today, thanks to remarks from Swiss Finance Minister Ueli Maurer.
Mr Maurer has stated that although the Swiss Franc is currently overvalued, it is not dangerously so.
He has also reassured CHF traders by suggesting that ‘solutions’ could be found to ongoing disputes between Switzerland and the EU over trading agreements.
GBP/CHF Forecast: Will Pound Sterling to Swiss Franc Exchange Rate Recover on CBI Stats?
The Pound (GBP) has undeniably had a bad week, but there might be a chance for gains against the Swiss Franc (CHF) when next week’s Confederation of British Industry (CBI) data comes out.
Before then, however, there will be one last threat from this Friday’s UK public sector net borrowing data for June.
This is predicted to show an expansion of May’s deficit reading with a shift from £-3.36bn to £-3.5bn, which would indicate that the government is slipping further into debt.
Getting onto potentially better news, CBI industrial orders data is out on Tuesday next week, followed by Wednesday’s CBI business optimism and distributive trade stats.
The only economic forecast at present is for the business optimism index to print positively, with a shift from -4 points up to 5.
If this forecast proves accurate and is accompanied by higher reported industrial orders and distributive trades then the Pound to Franc exchange rate could rise.
On the other side of the currency pairing, the only notable Swiss data out next week will be an economic sentiment reading on Wednesday.
This may limit any GBP/CHF gains on the day, as it is forecast to show a Franc-supportive rise from 8 points to 19.6.
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TAGS: Pound Swiss Franc Forecasts