Swiss Franc (CHF) Retreats as Strong Chinese Trade Balance Bolsters Market Confidence Today
Although sentiment towards the Pound (GBP) shows no particular signs of improvement on Wednesday the Pound Sterling to Swiss Franc (GBP/CHF) exchange rate has been making fresh gains around 1.4530. Largely this is due to an unexpectedly strong Chinese Trade Balance, which bettered forecast to show a widening surplus of 60 billion US Dollars (USD) and weakened demand for safe-haven currencies this morning.
Traders have been given little reason to buy into the Pound (GBP) on Tuesday as the latest UK Industrial Production figures fell short of forecast.
Contracting Swiss Retail Sales Prompted Swiss Franc (CHF) Exchange Rate Downtrend
On Monday the Pound Sterling to Swiss Franc (GBP/CHF) exchange rate rallied strongly as the Franc (CHF) was dented by some unimpressive Retail Sales figures. Swiss consumer spending in November contracted particularly sharply on the year, slumping from -0.6% to -3.1% as domestic retail demand failed to pick up ahead of the Christmas trading season. A relatively strong Franc could be blamed for this shortfall, as shoppers have been showing a tendency of crossing the border in order to find cheaper deals within Eurozone nations. With safe-haven demand unlikely to abate in the near future, due to continued signals of slowdown from China, the stronger Swiss Franc can be expected to continue weighing on domestic data.
Pound Sterling (GBP) Trends Lower Today after UK Industrial Production Falters
Tuesday, however, has seen those gains reversed as the Pound (GBP) substantially softened across the board in response to a disappointing Industrial Production report. Particularly concerning to pundits was the severe contraction in manufacturing output on the year, which fell by -1.2% rather than the anticipated -0.8% to demonstrate that the sector continued to struggle in November. With demand for British-made products declining in the face of a global economic slowdown, this does not bode especially well for the continued health of the UK economy. As this raft of discouraging data equally suggests that the Bank of England (BoE) will remain in no great hurry to raise interest rates, in spite of the Fed’s December rate hike, the appeal of Sterling was consequently greatly reduced.
GBP/CHF Exchange Rate Forecast: BoE Rate Decision to Trigger Further Pound Volatility
While there is no further Swiss economic data to come this week the Franc could be bolstered by any resurgence in stock market volatility, especially if the latest Chinese imports and exports figures are found to have contracted as substantially as forecast.
Thursday’s BoE interest rate decision is unlikely to see any particular shake-up as the Monetary Policy Committee (MPC) is expected to maintain an 8-1 split in favour of leaving interest rates at their record low for another month. However, should policymakers begin to take a more hawkish tone with regards to future monetary tightening the Pound could find some renewed support.
Current GBP, CHF Exchange Rates
At the time of writing, the Pound Sterling to Swiss Franc (GBP/CHF) exchange rate was trending lower at 1.4426, while the Swiss Franc to Pound Sterling (CHF/GBP) pairing was making strong gains in the range of 0.6926.