Since the start of June, the Pound Sterling to Swiss Franc (GBP/CHF) exchange rate has been trending within the range of 0.6811 to 0.7063.
The Pound softened against the Swiss Franc as the Alpine currency received support from increased demand for safe-haven assets. Concerns over the Greek debt crisis escalated on Monday after emergency talks between Greece and its international creditors ended in failure. Tensions are rising across Europe as both sides are refusing to back down on key issues. As a result, the markets are becoming increasingly jittery and the possibility of a Greek default and ‘Grexit’ from the Eurozone has seen investors turn to safer currencies.
‘The Greek negotiating team are still optimistically pushing for continued inclusion in the monetary union, while at the same time pushing for debt forgiveness and maintaining government. This is simply not going to happen but it is important to note that both the Greeks and the Creditor nations have common ground, in so much that they are both agreeing on a 3.5% primary surplus by 2018. It’s the pace and how they get there in the years leading into this that are a major point of contention,’ said an economist.
The Swiss Franc advanced against a number of peers despite the release of data showing that producer and import prices declined for a twentieth consecutive month. According to the Federal Statistics Office, producer and import prices fell by 6% on a year-on-year basis, a faster decline than the 5.2% drop seen in the preceding month. The annual rate of decline exceeded economist forecasts for a 5.1% fall. Meanwhile, the month-on-month fall in producer and import prices slowed to 0.8% from 2.1% in April. Economists had forecast a 0.1% rise for May.
Countering that negative report was data which showed that retail sales in Switzerland rose more-than-forecast last month. Retail sales were shown to have increased to a seasonally adjusted annual rate of 1.6% from the -2.8% seen in April. Economists had forecast that sales would rise to -2.2%. On a month-on-month basis, retail sales increased 2.1%, a solid improvement on the previous month’s 0.7% rise and far better than economist expectations for a rise of just 0.42%.
On Tuesday the GBP/CHF exchange rate will experience volatility due to the publication of UK inflation and PPI data. The main event for the Swiss Franc however will occur on Thursday when the Swiss National Bank announces its latest interest rate decision. Economists are expecting the central bank to leave rates unchanged at -0.75%.
The Pound Sterling to Swiss Franc exchange rate was trading in the region of 1.4444