Last week saw the Pound Sterling to Swiss Franc (GBP/CHF) exchange rate post 1.4855 at the end of the European trading session, little changed from the week’s opening levels. This lack of volatility occurred in spite of the UK publishing its influential Manufacturing, Construction and Services PMIs. A marked slowing in service sector output weakened the Pound against a number of its rivals, but managed to hold its own against the Franc.
The biggest ‘Swissie’ news last week came from the SVME Manufacturing PMI and the Swiss Inflation Rate for August. The former result showed an unexpectedly strong rise from 48.7 to 52.2, but the latter counteractively dropped annually from -1.3% to -1.4%. The monthly variant, however, indicated an improvement from -0.6% to -0.2%, although this obviously still indicates a deflationary status.
This week has been so far devoid of major occurrences for both currencies, although today did see the Pound shoot up against the Franc on account of the Swiss Unemployment Rate rising from 3.1% to 3.2%. Sterling rose from 1.4847 to a peak of 1.5070 following the news; the British currency’s general performance so far has been extremely positive thanks to beneficial FTSE 100 activity caused by Glencore revealing sweeping plans to reduce company debt on Monday.
If this trend continues, the Pound seems set to remain dominant against the Franc until Thursday at least, when the Bank of England (BoE) will announce its interest rate decision. The price of gold will also be a deciding factor on the leader of the pairing given that it continues to fluctuate around the lowest point in over 5 years.
Over this week and the next, Pound Sterling to Swiss Franc exchange rate movement may occur as a result of the UK Trade Balance figures for July, the Bank of England interest rate decision for September, the Bank of England Inflation Expectation for the next 12 months and the Swiss National Bank (SNB) interest rate decision.
Unfortunately for Sterling, the forecasts for the Trade Balance figures have been decidedly pessimistic, with the Visible, Non EU and Total Balance results all being expected to show shortfall expansions. No change is expected of the BoE’s rate decision, although any hawkish remarks by policymakers will likely have a Pound-positive impact. No predictions have been made for the other BoE economic announcement. The SNB decision to put interest rates in the negative at -0.75% has not been forecast to change next week, although any significant upward or downward movements in the price of gold may have a major impact on the SNB’s thought process closer to the time.