Last week the Pound Sterling to Swiss Franc currency pair spent the week trading between lows of 1.4595 and highs of 1.4773 as the British asset was variously supported by hawkish interest rate-related remarks from Bank of England (BoE) Governor Mark Carney and weakened by mixed UK reports.
The Franc, meanwhile, felt the impact of worse-than-anticipated UBS Consumption and KOF Leading Indicator figures. Although the level of Swiss Industrial Production increased by more-than-expected in the fourth quarter, Monday’s SVME Manufacturing PMI showed that the sector fell further into contraction territory in February.
This week the US Dollar to Swiss Franc (USD/CHF) and Pound Sterling to Swiss Franc (GBP/CHF) exchange rates have both strengthened to trade in the region of six week highs as the downtrend in the European currency continues.
While the Franc surged back in January, advancing by more than 20% against a number of its peers, the Swiss asset has since pared these gains considerably as a result of global developments and domestic concerns.
Although Tuesday’s Swiss GDP report showed a stronger-than-forecast rate of expansion in the fourth quarter of 2014, the figures failed to lend the Franc support as investors are expecting this year’s first quarter growth to have been disrupted by the Swiss National Bank’s (SNB) decision to scrap its cap with the Euro.
Data revealed that the Swiss economy expanded at a rate of 0.6% in the final three months of last year. This was down from the growth of 0.7% recorded in the third quarter but considerably stronger than the anticipated expansion of 0.3%.
In a statement released with the figures, the State Secretariat for Economics observed; ‘Private and public consumption expenditures as well as the balance of trade in goods delivered positive growth contributions.’
Annually, the pace of expansion held at 1.9% in the fourth quarter rather than softening to 1.7% as projected.
The Franc’s 0.3% decline against the Pound was also due to the UK’s Markit Construction PMI coming in above expected levels. Monday’s UK Manufacturing PMI also impressed, so the UK could be in line to record stronger-than-forecast growth over the first three months of 2015.
With influential US reports lacking until Wednesday, the US Dollar to Swiss Franc currency pair may continue trading in its current range.
On Thursday the Euro to Swiss Franc (EUR/CHF) exchange rate could experience volatility as a result of the European Central Bank’s (ECB) interest rate announcement. The central bank is scheduled to roll out the quantitative easing programme outlined in its January gathering. The tone of accompanying statements from ECB President Mario Draghi could influence the direction taken by the Euro before the weekend.
The only other Swiss report to focus on this week is the nation’s inflation figures for February. Consumer prices are believed to have fallen further into negative territory.
The US Non-Farm Payrolls report, also scheduled for release on Friday, is likely to be a cause of widespread currency market movement.
Strong jobs growth and a decrease in unemployment would increase the odds of the Federal Reserve hiking interest rates this summer and may turn the US Dollar bullish before the weekend.
As it stands, the Pound Sterling to Swiss Franc (GBP/CHF) exchange rate is trading in the region of 1.4761 and the US Dollar to Swiss Franc (USD/CHF) exchange rate is trading in the region of 0.9605.