Pound to Swiss Franc Exchange Rate Gains Limited as UK Election Jitters Persist
The safe haven Swiss Franc (CHF) has been weaker today, as the latest US-China trade developments drive markets, and this has helped the Pound Sterling to Swiss Franc (GBP/CHF) exchange rate to advance despite a lack of Sterling support.
While GBP/CHF spent most of last week trending with an upside bias due to optimism around UK politics, the pair ultimately fell back and closed the week near its opening levels, near the interbank level of 1.27.
Since markets opened this morning, GBP/CHF has seen slight gains, but still trends in the interbank region of 1.27 at the time of writing.
The Pound (GBP) outlook is cloudy and analysts expect a month of general election uncertainty, while the Swiss Franc outlook remains dominated by US-China trade news.
Pound (GBP) Exchange Rate Support Limited amid UK General Election Uncertainties
Investors have had little reason to buy the Pound (GBP) since last week. While last week saw a UK General Election confirmed for the 12th of December and markets bet that the outcome of the election could be Pound-positive, gains have been limited.
While there are hopes that the ruling Conservative Party could win the election and push through its relatively soft Brexit plan, there are also concerns that opposition parties could perform better and cause fresh uncertainty in the Brexit process.
With election uncertainties dominating the Pound outlook, the latest UK PMI data has had little impact on Sterling.
Britain’s manufacturing and construction PMIs have both beaten forecasts slightly, but both still printed concerning contractions overall. As a result, Pound investors continue to focus on political developments.
Not a pretty picture being painted by the UK construction PMIs for October. 44.2 up from September's 43.3. House building, commercial & civil engineering all well below the 50 mark. Rough indicator of official stats. pic.twitter.com/V0xCSguLIy
— Rupert Seggins (@Rupert_Seggins) November 4, 2019
Swiss Franc (CHF) Exchange Rates Lack Support amid Trade Developments and Data
The latest hopes that US-China trade relations are becoming more optimistic have knocked the Swiss Franc (CHF) lower today, making it easier for GBP/CHF to hold its ground and avoid losses.
The Swiss Franc is a safe haven currency that is appealing in times of global uncertainty, but this means that it is often less appealing in risk-on environments.
As a result, signs that the US and China could be getting closer to reaching a ‘Phase 1’ preliminary trade deal as soon as this month has been keeping pressure on the Swiss Franc.
Goldman: Trump to cancel December scheduled tariff hikes
— Paul McNamara (@M_PaulMcNamara) November 4, 2019
On top of US-China trade relations and risk-on movement, the Swiss Franc was also pressured by Switzerland’s latest consumer confidence results which fell short of expectations.
Q4 consumer confidence came in at -10.4. According to comments from SECO:
‘Consumer sentiment has worsened slightly. Consumers have proved less optimistic about both general economic development and the labour market than in previous quarters.’
Pound to Swiss Franc (GBP/CHF) Exchange Rate Volatility Expected amid Election Campaigning
While there is not much notable Swiss data due for publication until later in the week, the Swiss Franc (CHF) may be more likely to influence the Pound to Swiss Franc (GBP/CHF) exchange rate’s movement in the coming sessions.
The Pound (GBP) is likely to keep being influenced by UK politics, and with the election still a month and a week away investors will be hesitant to move too much on the British currency.
UK services PMI data will be published tomorrow and the Bank of England (BoE) will hold its November policy decision on Thursday, but unless these have highly surprising results investors are more likely to remain focused on election speculation.
The safe haven Swiss Franc, on the other hand, could drive GBP/CHF lower if US-China trade relations worsen and lead to fresh safe haven demand. Further US-China optimism would have the opposite effect.
As for data, Friday’s Switzerland unemployment rate from October could also influence the Pound to Swiss Franc (GBP/CHF) exchange rate.