Pound to Swiss Franc Rises as UK Manufacturing PMI Beats Forecasts in January

GBP/CHF Exchange Rate Heads Higher as UK Covid-19 Vaccination Numbers Continue to Rise

The Pound to Swiss Franc exchange rate rose by 0.6% today, with the pairing currently trading around 1.22fr.

Sterling rose against the Swiss Franc today following the publication of January’s UK Manufacturing PMI, which beat forecasts and rose to 54.1.

Rob Dobson, Director at IHS Markit, was altogether hopeful that the UK’s manufacturing sector could continue to improve, commenting:

‘The hope is that the current constraints will start to ease once COVID-19 restrictions are lifted, vaccines are rolled out and ports, suppliers and manufacturers adapt to the new trading environment post-Brexit. If so, supply, demand and production bottlenecks should slowly work through the system and growth will not be knocked too far off course through 2021. However, there is no swift end in sight to these headwinds, and the longer the current circumstances remain the greater the potential damage to the sector and its suppliers.

Saturday also saw the UK hit a new record of 600,000 vaccinations in a single day. As a result, GBP investors are more hopeful that the Government’s Covid-19 vaccine programme could hit its mid-February target.

Latest figures show that 13.4% of the UK have received at least one dose of the coronavirus vaccine, while daily cases of the virus are down by -8,916 compared to last week.

UK markets are also optimistic about the week ahead. The Bank of England’s (BoE) first policy meeting this year is expected to offer a more optimistic outlook for 2021.

Swiss Franc Subdued as Risk Sentiment Improves on Asia-Pacific Stock Surges

The Swiss Franc struggled against Sterling today after a rally in Asian stocks dampened demand for the safe-haven CHF.

Silver prices saw strong gains, boosting stocks in Asia-Pacific. However, a slump in Chinese manufacturing growth in January has left some traders feeling jittery about the global economy.

In Swiss economic data, this morning saw the release of December’s Retail Sales data. Swiss retail sales rose by 4.7% year-on-year, but this was not enough to boost the CHF/GBP exchange rate.

However, despite retail sales picking up at the end of last year, with food and tobacco contributing to the overall jump, the Swiss National Bank is focusing more on inflation instead.

As a result, today’s data has had little affect on Swiss Franc to Pound exchange rate.

Today also saw the release of the Swiss Purchasing Managers Index for January, which beat consensus and rose to 59.4 – its highest level since September 2018.

Claude Maurer, an economist at Credit Suisse, commented on the data:

‘Swiss industry not only benefits directly from demand out of Asia, but also indirectly, for example as a supplier to the German automotive industry.

‘While the service sector, which has a greater focus on domestic consumption, is experiencing a slowdown, there is no indication as yet of the kind of slump we saw in spring 2020.’

Sterling Could Head Higher as Covid-19 Vaccinations Appear to be on Schedule

Pound investors will continue to monitor the UK’s Covid-19 situation this week. If first-time vaccinations continue to rise, then Sterling will benefit from an improved outlook for the British economy.

However, any more complications arise over coronavirus vaccination supplies would be GBP-negative.

The Swiss Franc will continue to fluctuate on global risk sentiment this week. Any further indications that the US could announce its enormous Covid-19 stimulus package, however, would further weaken demand for the safe-haven CHF.

The GBP/CHF exchange rate could continue to head higher this week if the UK’s Covid-19 vaccination programme appears to be on target for mid-February.

David Moore

Contact David Moore

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