Pound Sterling to Swiss Franc (GBP/CHF) Exchange Rate Rebounds from July Worst on UK Growth Surprise

Pound to Swiss Franc Exchange Rate Recovery Limited on Mixed UK Data and Strong Swiss Job Stats

Due to persisting Brexit fears and yesterday’s stronger than expected Swiss unemployment data, the Pound Sterling to Swiss Franc (GBP/CHF) exchange rate touched its worst levels all month this morning. Still, the pair rebounded slightly following the publication of Britain’s latest growth stats.

Mixed global safe haven demand caused the Swiss Franc (CHF) to fall last week, helping GBP/CHF to edge higher from the interbank level of 1.23 to 1.24.

However, following another jump in demand at the beginning of the week, GBP/CHF has tumbled and touched on its worst level since June this morning.

At the time of writing the pair trended a little higher, but the Pound’s (GBP) potential for gains was dampened as while UK growth improved, other key figures published this morning disappointed investors.

This left the safe haven Swiss Franc resilient, as investors remained bullish on the expectation that the Swiss National Bank (SNB) would not become more dovish like other major Central Banks.

Pound (GBP) Exchange Rates Edge Higher as UK Growth Beats Forecasts

The Pound (GBP) has seen persistent pressure in recent weeks, as fears of a potential no-deal Brexit persist and bets that the Bank of England (BoE) could become more dovish instead of remaining hawkish weighed heavily.

GBP/CHF was only able to advance last week due to broad weakness in the Swiss Franc (CHF) throughout the week, and the British currency continued to lack support until some of today’s major ecostats beat forecasts.

This morning saw the publication of Britain’s Gross Domestic Product (GDP) growth rate data from May. Growth beat forecasts in both yearly and three-month prints, bolstering hopes that Britain’s economy has been more resilient than feared.

However, other figures including industrial and manufacturing production stats were highly disappointing.

Some analysts also noted that May’s improvement in growth failed to offset the poor performance seen in April. This left investors concerned that a Q2 contraction in growth was still possible, and limited the Pound’s potential for gains.

Swiss Franc (CHF) Exchange Rates See Resilience amid Safe Haven Demand and Unemployment Data

Despite the Pound’s (GBP) rebound this morning, the Swiss Franc (CHF) has sustained most of this week’s gains against the British currency due to both global and domestic factors.

As last week’s US-China trade hopes soften and investors remain anxious about the possibility of a prolonged trade war between the nations, the Swiss Franc has been benefitting from market demand for safe haven currencies.

On top of fresh safe haven demand, yesterday’s fresh Switzerland data beat expectations and further bolstered support for the Franc.

Switzerland’s June unemployment rate was expected to have improved slightly from 2.3% to 2.2%, but instead improved to 2.1%.

This made it the best recorded monthly unemployment rate in over 15 years.

It served as solid support for Swiss Franc (CHF) demand, and made investors more confident that the Swiss National Bank (SNB) would not need to follow other major Central Banks with interest rate cuts.

Pound to Swiss Franc (GBP/CHF) Exchange Rate Recovery May be Limited as Brexit Fears Dominate

The rest of this week’s economic calendar will be relatively quiet in terms of UK and Swiss data, which will leave Pound to Swiss Franc (GBP/CHF) exchange rate investors to react to political developments or notable movements in other major currencies.

For example, this evening will see the publication of the Federal Reserve’s June meeting minutes report, which could influence market risk-sentiment and safe haven demand if it surprises investors.

If the Fed is less dovish than expected, the US Dollar (USD) would strengthen and the Swiss Franc (CHF) would be weaker as a result. This could lead to GBP/CHF gains.

The only notable UK news still on the way this week are upcoming speeches from Bank of England (BoE) officials, which could influence BoE interest rate cut bets if any surprising comments.

With just one more full week ahead for the UK Conservative Party leadership contest, any notable political or Brexit developments could also drive movement in the Pound to Swiss Franc (GBP/CHF) exchange rate.

Josh Jeffery

Contact Josh Jeffery


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