The Pound Sterling to Swiss Franc (GBP/CHF) exchange rate was trending within a narrow range on Tuesday after the UK economy succumbed to deflation in April. After months of tumbling crude oil prices, global inflation has declined and many nations’ Consumer Price Indexes (CPI) have began seeping into contraction territory. Tuesday saw UK non-core inflation fall from 0.0% to -0.1%. Additionally, the core measure also took a surprising fall from 1.0 to 0.8%. The stumble into negative territory is the first on record for the UK since March 1960.
However, Bank of England (BoE) Governor Mark Carney has warned that British consumers should enjoy lower prices while they can. Carney commented: ‘We expect inflation to be very low for several months. But over the course of the year, towards the end, inflation should start to pick up towards our 2% target. Our job is to ensure that inflation remains low, stable and predictable. The British people should enjoy this period of very low energy prices, very low food prices… enjoy it while it lasts.’
Meanwhile, the Swiss Franc has enjoyed some support as ongoing Greek negotiations become shrouded in uncertainty. The prospect of Greece defaulting on its International Monetary Fund (IMF) repayments and leaving the Eurozone is a very real threat at the moment. The nation has been struggling to make headway with creditors and Greek government officials have suggested the nation will be out of money by June 5
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. Tuesday saw German Chancellor Angela Merkel and French President Francois Hollande urge for progress to be made in the situation.
The negotiations have helped to reinstate the Franc’s trusty safe-haven status following the Swiss National Bank’s (SNB) surprise removal of the currency’s peg with the Euro earlier in the year. Market strategist Peter Rosenstreich commented: ‘The Franc has shrugged off a lot of the interventionist worry that had moved it away from its historical place in the currency world. This is part of a longer-term trend where the Swiss Franc is no longer being manipulated by the central bank. It will take on more of the characteristics of its traditional role.’ It’s forecast that any drastic downturn in Greek negotiations could see the Swiss Franc rally.
By way of domestic data, the Franc was offered little support on Monday when the annual Swiss Retail Sales ecostat fell further in March, from -2.7% to -2.8%. The rest of the week could see more CHF/GBP movement with Wednesday seeing the release of the ZEW Swiss Expectations Survey. Additionally, Swiss National Bank officials are also scheduled to speak over the course of the week, which could impact Swiss Franc trading significantly.
The Pound Sterling to Swiss Franc (GBP/CHF) exchange rate is trading at 1.4540. The Euro to Swiss Franc (EUR/CHF) exchange rate is trending in the region of 1.0436.