Pound Sterling (GBP) has made a moderate advance against the Euro (EUR) this afternoon, hitting an exchange rate of €1.1305.
This appreciation is down to the morning’s UK construction PMI for June, which has shown a surprise rise in sector activity.
The reading increase from 52.5 points to 53.1 had a muted reception in some quarters, but has still raised confidence among GBP traders.
(Last updated 3rd July, 2018)
The Pound (GBP) has continued to trade down against the Swiss Franc (CHF) this afternoon, due to a disappointing Brexit development.
Following reports that the UK government has devised a third potential customs union arrangement, EU officials have reportedly rejected the plans.
The exact nature of the UK proposal is unknown, but it is suspected to propose indefinite single market access to prevent Irish border issues.
While this would might solve the border problem, it could also aggravate pro-Brexit MPs who want a more definitive split from the EU.
Stressing that such a proposal will not sit well with the EU, former Director General of the EU Legal Service Jean-Claude Piris said:
‘The EU is in difficulties at the moment; the one and only success which glues all these countries together is a little bit the money and the internal market.
‘If you fudge the internal market by allowing a third state to choose what they want … it is the beginning of the end.’
(Last updated July 2nd, 2018)
Higher UK Services Sector Activity could Support GBP/CHF Exchange Rate
The Pound (GBP) has made minor losses against the Swiss Franc (CHF) today, ahead of a key services sector PMI reading.
Today’s manufacturing PMI has been uninspiring, but the services sector reading could inspire greater GBP/CHF trading if it prints positively.
If the reading shows a rise in services sector activity, then the Pound could rally against the Swiss Franc.
The services sector covers areas such as financial services, retail sales and tourism revenues, so a higher figure would be a good start to summer.
Can Falling UK Trade Deficit Boost Pound Sterling to Swiss Franc (GBP/CHF) Exchange Rate?
Looking a bit further ahead, the Pound (GBP) could also be affected by the UK trade balance for May, which is due out on 10th July.
This measurement of UK imports and exports is tipped to show another deficit reading, but a significant reduction during the month regardless.
If the UK’s trade reading does show a forecast-matching or beating reduction from £-5.08bn to £-1.2bn, the Pound could advance against the Swiss Franc (CHF).
Swiss Franc to Pound Sterling Forecast: Could Swiss Inflation Data Boost CHF/GBP Exchange Rate?
On the other side of the pairing, the next economic data which could affect the Swiss Franc’s (CHF) trading against the Pound (GBP) will be Thursday’s inflation reading.
Covering year-on-year inflation rate movement in June, this is predicted to show a minor rise from 1% to 1.1%.
The Swiss National Bank (SNB) inflation rate target is close to but below 2%, so a forecast-matching result wouldn’t risk the target being exceeded.
Despite this, the Swiss Franc could still appreciate if higher inflation is reported. After sustained negative inflation since 2014, Swiss inflation has grown since early 2017.
Further growth could reassure CHF traders that slow but steady growth is continuing.
Will Higher Swiss Jobless Rate Cause CHF/GBP Exchange Rate Decline?
Beyond this week’s Swiss inflation rate data, the CHF/GBP exchange rate might risk a decline when June’s unemployment rate reading comes out on 9th July.
Switzerland previously posted an enviably low unemployment rate of 2.4% in May, but a rise back up to 2.6% is forecast for June.
A higher level of joblessness would break the current streak of lower unemployment in the country, which has progressively fallen from 3.3% since January 2018.
The Swiss Franc (CHF) is unlikely to plummet against the Pound (GBP) if the jobless rate rises, but the news may still rattle Franc traders and cause a decline next week.