Pound Swiss Franc (GBP/CHF) Exchange Rate Rises despite EY Item Club Slashing UK Economy Growth Forecasts
The Pound Sterling Swiss Franc (GBP/CHF) exchange rate rose, and the pairing is currently trading at an inter-bank rate of 1.3192Fr.
Forecasters at the EY Item Club cut their growth outlook for the UK’s economy as the Brexit uncertainty continues.
It is now forecast that the UK will grow by 1.3% over 2019, down from the previous 1.5% predicted growth.
The Item Club suggested that while the UK saw a strong start to 2019 with stockpiling goods ahead of the original 29 March departure date, the unwinding of stockpiling could hit growth later in the year.
EY Item Club’s Chief Economic Adviser, Howard Archer said:
‘Delays to Brexit, a difficult domestic economic and political backdrop and slower global economic activity have resulted in a weaker outlook for the UK GDP growth this year.’
However, this did little to stop the Pound rising against the Swiss Franc on at the start of this week’s session.
Swiss Franc (CHF) Slides on a Cautious SNB
On Friday, Chair of Swiss National Bank (SNB) Thomas Jordan said that the central bank must keep interest rates negative.
This leaves the bank ready to intervene on currency markets to strengthen the Franc despite calls for positive rates to be restored quickly.
During the annual SNB’s shareholder meeting, Jordan said that even though global economic activity weakened, the Swiss economy should regain pace after stagnating during the second half of 2018.
However, inflation prospects are subdued, with the Chair of the SNB noting that financial and foreign exchange markets remain ‘fragile.’
Commenting on this, Jordan said:
‘Against the current backdrop, our unconventional monetary policy with the negative interest rate and our willingness to intervene in the foreign exchange rate market as necessary remains both essential and appropriate.’
The dovish tone of the SNB likely weighed on the Franc, causing it to slide against Sterling.
Pound Swiss Franc Outlook: Will the GBP/CHF Exchange Rate Edge Up on Higher-than-Forecast UK Consumer Confidence?
Looking ahead to Tuesday, the Pound (GBP) could continue to rise against the Swiss Franc (CHF) following the release of the UK GfK consumer confidence.
If consumer confidence edges up in April, Sterling could receive an upswing of support.
Meanwhile, later in the morning the Swiss Franc could slide following the release of the KOF Leading Indicator.
If April’s figure slides further than forecast, the Pound Swiss Franc (GBP/CHF) exchange rate could rise.