Pound Sterling Swiss Franc (GBP/CHF) Exchange Rate Muted as UK House Prices See Largest Gain in 11 Years
UPDATE: The Pound Sterling Swiss Franc (GBP/CHF) exchange rate was left muted at the end of the week. This left the pairing trading at around 1.1933Fr.
The Pound received some support today after the latest British house prices jumped by the most in 11 years. This added to signs that some parts of the country’s economy have rebounded rapidly after lockdown measures were eased.
Nationwide revealed its average house prices rose by 1.7% in July. This was the largest increase since August 2009 when the market began recovering from the financial crisis.
Nationwide chief economist Robert Gardner noted:
‘The bounce back in prices reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions.’
This followed upbeat housing data from the Bank of England (BoE) which showed mortgage approvals had quadrupled in June. However, this was not enough to boost GBP to make gains against the Swiss Franc.
Pound Sterling Swiss Franc (GBP/CHF) Exchange Rate Muted as SNB Posts Q2 Profit
The Pound Sterling Swiss Franc (GBP/CHF) exchange rate remained flat on Friday morning. This left the pairing trading at around 1.1935Fr.
The Swiss Franc remained under pressure today after the latest retail sales data was mixed.
Annually, sales rose by 1.1% in June following a downwardly revised 6.2% just a month earlier. However, month-on-month sales tumbled by -3.8% after a jump of 30.3% in May.
Meanwhile, further data from Switzerland showed the Swiss National Bank (SNB) posted a second-quarter profit.
The country’s central bank revealed that on Friday it made a profit of 34.4Fr billion following a 38.2Fr billion first quarter loss.
In a statement, the SNB said:
‘The first half of 2020 was dominated by the effects of the coronavirus pandemic, which led to high volatility on the financial markets.
‘Strong fluctuations are therefore to be expected, and only provisional conclusions are possible as regards the annual result.’
Pound (GBP) Struggles as Attention Turns to BoE
Sterling remained flat against the Swiss Franc today as traders looked to next week’s Bank of England (BoE) monetary policy meeting.
The BoE is expected to shed further lights on how fast it believes the country’s economy will recover from the coronavirus crisis.
However, markets expect the bank is unlikely to implement its £100 billion of stimulus it announced during last month’s meeting.
Between February and May, Britain shrank by close to a quarter and many economists expect it will be years before activity returns to pre-Covid-19 levels.
The stimulus that was announced last month will fund bond purchases until next year. Investec’s economist, Philip Shaw has said he expects November will be the next key decision.
Shaw noted:
‘For now, we’re at: ‘Okay, let’s set the tiller steady … keep rates on hold, and just see what’s going on in the economy.’
The BoE’s Governor, Andrew Bailey is expected to be asked about the bank’s stance on taking interest rates into negative territory. He had previously said this is something Britain’s central bank would consider and according to Shaw:
‘Banks have to have time to implement a possible negative rate structure, and there are all sorts of technical complications as well.’
Pound Swiss Franc Outlook: Swiss Inflation and UK PMIs in Focus
Looking ahead to Monday, the Swiss Franc (CHF) could suffer some losses against the Pound (GBP) following the release of the latest inflation data.
If Swiss inflation slumps further than expected in July due to the coronavirus pandemic, it will weigh on CHF sentiment.
Meanwhile, Sterling could receive an upswing of support following the release of the latest Markit manufacturing PMI.
If data reveals activity in Britain’s manufacturing sector has rebounded in July, it will boost GBP sentiment. This will see the Pound Swiss Franc (GBP/CHF) exchange rate make further gains.