The Swiss Franc weakened against most of its major currency peers on Wednesday despite the release of an improved UBS consumption indicator report.
The Swiss Franc to Pound Sterling exchange rate was trading in the region of 0.6998
Swiss consumption was shown to have increased in February due to a sharp increase in new car registrations. According to the report published by UBS bank, the Swiss consumption index increased to a reading of 1.19 in February, a rise from the 1.11 figure recorded in the preceding month.
The report highlighted that the Swiss National Bank’s ditching of the Franc’s cap with the Euro was proving a burden and a weight on retailer optimism. Consumer sentiment was shown to have fallen by -4 last month as the surge in strength of the Swiss Franc damaged the nation’s retailers.
Retailers were shown to be offering rebates and discounts in an attempt to counter the increased shopping tourism to neighbouring countries, which may boost the purchasing power of consumers. However, the ongoing price pressure will force the companies to cut costs, which in turn is likely to lead to lower wage rises and an increase in the nation’s unemployment rate throughout the year. A rise in unemployment would, in turn, harm consumption rates and have a negative impact upon the Swiss economy.
The data also showed that the number of new car registrations recorded in the Alpine nation climbed by 13.0% in February from the preceding month. Despite the strong month on month gain, the report showed that new registrations had in fact dropped by 3% from the same period last year.
The Pound Sterling advanced against the Swiss Franc and other major peers as data showed that UK mortgage approvals rose to a five-month high in February.
According to the British Bankers Association, the number of mortgages approved climbed to a seasonally adjusted 37,305 in February, up from the 36,517 recorded in the preceding month.
The value of mortgage approvals remained unchanged at an adjusted £6.2 billion in February. The number of total mortgages increased to 61,361 from 58,881 in January and the value rose to £9.6 billion from £9.3 billion.
The Euro also advanced after data showed that German business confidence improved this month. According to the IFO, institute its business climate index rose to a reading of 107.9 in March, a rise from the preceding month’s figure of 106.8.
The Swiss Franc to Euro exchange rate was trading in the region of 0.9507.