The Pound Sterling to Swiss Franc (GBP/CHF) exchange rate continued to soften later on Monday as weaker than forecast UK data caused investors to raise their bets that the Bank of England will refrain from raising interest rates until later in the year.
Focus will now be shifting to Tuesday’s UK services Markit/CIPS PMI data which is also forecast to show that the sector experienced a slowdown in December.
As Monday’s session progressed the Pound to Swiss Franc (GBP/CHF) exchange rate softened as the Pound was weighed upon by weaker than forecast UK Construction PMI data.
The Markit/CIPS construction purchasing managers’ index fell to 57.6 in December from 59.4 in November, still comfortably above its long-run average but well below economists’ forecasts of a slight decline to 59.0.
Earlier the Pound to Swiss Franc (GBP/CHF) exchange rate firmed on Monday due the publication of a worse-than-forecast Swiss Manufacturing Purchasing Managers Index (PMI). Growing expectations that the European Central Bank (ECB) will introduce quantitative easing have also dragged upon the Swiss currency.
Data released earlier in the session softened the Swiss Franc against the Pound and other major peers but attention quickly turned back to events in Europe.
Data released by the Swiss SVME purchasing managers association and Credit Suisse showed that manufacturing improved in December, suggesting that the malaise in the Eurozone is not having a detrimental impact on demand for Swiss goods. However, the improvement was not as strong as economists had been hoping.
The PMI rose to a seasonally adjusted level of 54.0 points last month, a rise from the reading of 52.1 recorded in November.
Economists had been forecasting for a rise to a reading of 54.3.
‘Although a clear dent can be seen in the summer of 2014, the PMI ended the year pretty much at its prior year level and the long term average of 53.9 points. The outlook for 2015 is therefore cautiously optimistic and order books are pleasingly full and companies are taking on more staff,’ said analysts from Credit Suisse Group AG.
Pound Sterling to Swiss Franc (GBP/CHF) Exchange Rate Forecast
The Pound likely to come under pressure over the coming weeks as market attention looks set to focus on May’s general election and expectations that upcoming UK economic data will show that the UK economy is slowing.
Expectations are high that the general election will result in another hung parliament as none of the major political parties looks set to have enough support to win outright.
Some forecasters are expecting that with support for the Liberal Democrats collapsing it will be UKIP that could hold the balance of power in May, something that some economists are concerned over as they see any threat to the UK’s membership of the European Union as a negative.
Swiss Franc traders will want to be aware of Friday’s Swiss inflation data and keep an eye on events in the Eurozone.
