Pound Sterling to Swiss Franc Declines following Dovish Federal Reserve Minutes

The Pound (GBP) to Swiss Franc (CHF) exchange rate was little changed on Wednesday as traders awaited the release of Federal Reserve policy meeting minutes and as market sentiment was put under pressure from a negative report by the International Monetary Fund (IMF).

Sterling softened early in the session after Halifax said that UK house prices would moderate over the remainder of the year.

Its latest survey showed that average house prices across the UK increased by 9.6% on an annual basis in September.

Month-on-month UK house prices increased by 0.6%.

The report was at odds with data compiled by the Nationwide Building Society, which showed house prices falling by 0.2%.

Also weighing on the Pound was the release of data on Tuesday, which showed that shop prices in the UK showed deflation deepened last month.

The September British Retail Consortium/Nielsen Shop Price Index was up 0.2% on the month but down 1.8% on the year, extending the 1.6% year-on-year drop seen in August.

Non-food deflation was 3.2% on the year, with food prices up 0.3% on a year ago.
‘Consumers can take heart that the outlook for inflation remains modest. Falling commodity prices, the strengthening of sterling, benign pressure in the supply chain and, critically, fierce competition across the retail industry suggests lower shop prices for consumers will continue,’ said Helen Dickison, Director General at the British Retail Consortium.

Market sentiment was under pressure following Tuesday’s announcement by the International Monetary Fund that it had cut its global growth forecast for 2014 and 2015, as weakness in Europe, Japan and emerging market economies weighs.

The IMF now sees 2014 global growth of 3.3% and 2015 growth of 3.8%, a decline of 0.1% for 2014 and 0.2% for 2015 from forecasts made in July.

The Swiss Franc meanwhile found some support after data released by the State Secretariat for Economic Affairs showed that the Alpine nation’s unemployment rate remained unchanged again in September.

The unemployment rate remained at the seasonally adjusted figure of 3.2% in September whilst the unadjusted jobless rate figure remained at 3%. The report showed that unemployment increased by 1,531 to 129,965 last month but fell by 1,107 compared to the preceding year.

Pound Sterling to Swiss Franc Exchange Rate Forecast

Sterling could make gains against the Franc on Thursday if Bank of England policy makers appear to be more hawkish when announcing their latest interest rates and quantitative easing decision.

Economists are widely expecting rates and the QE rate to remain unchanged at 0.5% and £375 billion respectively.

UPDATE

The Pound sterling to Swiss Franc is currently trending in the region of 1.5350.

Sterling has fallen to a fresh weekly low against the Swiss Franc after dovish Fed minutes caused traders to pull away from the US Dollar.

The minutes outlined concerns over slow global economic growth and an overvalued US Dollar. Traders have sought other currencies after pulling away from the US Dollar and the Swiss Franc, with its safe-haven qualities, has benefitted considerably.

Sterling has generally declined on overvaluation concerns. A negative result from House Price Balance data on Thursday has seen further Sterling declination.