The Pound Sterling to Swiss Franc (GBP/CHF) exchange rate has trended between 1.4549 and 1.4827 during the past seven days of trading.
Like most countries, Switzerland offered little data over the Christmas and New Year period, although the UBS Consumption indicator, released on the 30
th
of December, rose further from the average of around 1.5, increasing from 1.63 to 1.66. The rise suggests consumer demand is on the rise, which increases the likelihood that the Consumer Price Index will show a slowdown in deflation.
The Swiss Franc saw considerable appreciation during the first week of trading in 2016 as fears over a slowdown in the Chinese economy caused investors to turn to safe-haven assets. Chinese domestic stocks were sold in high volumes, with the Chinese exchange experiencing a -7% drop on Monday and again today, both of which caused officials to suspend trading early. Investors also deserted riskier currencies such as the Australian Dollar (AUD) and the New Zealand Dollar (NZD), buying Francs instead.
Pound Sterling has crashed against the Swiss Franc today following the pre-released text of a speech by Chancellor George Osborne, in which he highlights multiple threats to the UK economy in 2016. Mr Osborne notes many hazards, including the slowdown in China, plummeting oil and commodity prices, Russian and Brazilian recessions and political tensions in the Middle East.
The Chancellor has reinforced the need to continue with the current austerity measures and to make further spending cuts in order to ensure the health of the UK economy. The speech contains warnings against advocating additional public spending as an attempt to boost growth and claims that there is ‘A sense that the hard work at home is complete and that we’re immune from the risks abroad.’
The speech, which is scheduled for later today, has already caused Pound Sterling to dive against most of the major currencies, including a -1.1% drop against the Swiss Franc.
Several pieces of Swiss data are due out tomorrow, including the Consumer Price Index, which is expected to show that deflation softened from -1.4% to -1.2% year-on-year (YoY) in December. The move towards inflation will be welcomed by the Swiss National Bank (SNB), who are still struggling with an overvalued Franc.
Also due out are unemployment figures which are expected to show a 0.2% increase in December, although the seasonally-adjusted rate of joblessness is predicted to remain level at 3.4%. Next week the Real Estate Index Family Homes report and Retail Sales figures for November are the only significant data releases for Switzerland.
UK Trade Balance figures are due out tomorrow and are expected to show a significant drop in the deficit from -£4140 million to -£2700 million as the discrepancy between imports and exports narrows.
The Pound Sterling to Swiss Franc (GBP/CHF) is currently trending between 1.4542 and 1.4743.