Swiss Franc Forecast: GBP CHF Exchange Rate Tumbles as UK Consumers Face another Fall in Real Wages

The Pound to Swiss Franc (GBP CHF) exchange rate fell close to a four-week low this morning as markets reacted to the UK’s latest employment data.

GBP CHF is currently at around 1.2985, down 0.29% from its opening levels.

Sterling Sentiment Tumbled as Wage Concerns Grow

The Pound continued to slide against the Swiss Franc this morning as markets fear that slow wage growth in the UK will hamper the nation’s economic growth over the coming months.

According to figures released by the Office for National Statistics (ONS) this morning, UK wage growth slowed from 2.3% to 2.2% in September, just managing to beat expectations that growth would slip to 2.1%.

This meant that wages continued to lag well behind inflation at the end of the third quarter, with inflation striking a new five-year high of 3% in September.

Markets fear that this gap between wages and rising prices is likely to force more households to cut back spending, something that may significantly weigh on UK economic growth over the coming months.

Accompanying the wage statistics this morning were figures showing that the UK’s unemployment rate held at a 42-year low in September, but this failed to provide much lift for Sterling.

This is largely because while low unemployment traditionally leads to faster wage growth, the recent political uncertainty in the UK and lack of clarity over Brexit is causing firms to be more cautious about investing in Britain, leaving UK workers struggling to make ends meet.

Stephen Clarke, economic analyst at the Resolution Foundation said; ‘After years of impressive growth, there are signs that the labour market may be losing momentum.’

‘The still strong picture on employment still refuses to have any meaningful impact on wage growth, as Britain’s pay squeeze is getting deeper.’

While the Bank of England (BoE) predicts that wage growth will pick up and trend between 2.5% and 3.5% next year, many analysts remain a little more sceptical.

GBP CHF Forecast: Swiss Franc Still ‘Highly Valued’?

Despite slipping in demand given the meteoric rise of the Euro (EUR) this year, the Swiss government said on Wednesday that the Swiss Franc remains ‘highly valued’, echoing the recent sentiment of the Swiss National Bank (SNB).

The remarks follow SNB Chairman Thomas Jordan’s annual meeting with the Swiss government today in which he stressed that the bank would stand by its commitment to negative interest rates as the bank attempts to restrict the further appreciation of CHF.

GBP CHF Exchange Rate Forecast: Pound to Rally as UK Retail Sales Rebound?

Looking ahead the GBP CHF exchange rate may mount a recovery on Thursday with the release of the UK’s latest retail sales figures.

Economists forecast that sales growth will have rebounded in October after slumping to -0.7% in September, however with the rally expected to be relatively modest any gains for the Pound may be negligible.

Meanwhile, a lull in domestic data means it’s likely to be a quiet second half of the week for the Swiss Franc, with the next piece of notable data set to be Switzerland’s trade balance next Tuesday.

Luke Trevail

Luke studied Journalism at university but quickly moved into the financial sector, initially working in retail banking before joining TorFX in 2007. As a Senior Account Manager Luke assists in overseeing the management of the company’s exposure to currency volatility. He uses his years of foreign exchange experience to produce regular news updates exploring the latest currency movements.

Contact Luke Trevail