GBP/CHF Exchange Rate Dented by Weaker-Than-Expected Manufacturing PMI
The Pound Swiss Franc (GBP/CHF) exchange rate starts this week on the back foot after the UK’s manufacturing PMI printed below expectations.
At the time of writing the GBP/CHF exchange rate has slipped around 0.2% so far this morning, leaving the pairing trading at CHF1.2609.
Pound (GBP) Slips as UK Factory Activity Weakens
The Pound (GBP) is on the defensive against the Swiss Franc (CHF) this morning as GBP investors were left disappointed by the UK’s latest Manufacturing PMI.
According to data published by IHS Markit, the UK’s factory index slumped from 53.1 to 49.4 in May, falling well below the modest slide to 52 that had been forecast by economists and sinking into negative territory for the first time since July 2016.
It appears that Brexit uncertainty played a hand in the contraction last month, with new orders plummeting in May as retailers sought to sell through inventories stockpiled in recent months in preparation for a no-deal Brexit.
Furthermore the ongoing trade dispute between the US and China doesn’t appear to have done the UK’s manufacturing sector any favours either, further weakening the appeal of Sterling.
Rob Dobson, Director at IHS Markit said:
‘New order inflows declined from both domestic and overseas markets, as already high stock levels at manufacturers and their clients led to difficulties in sustaining output levels and getting agreement on new contracts.
‘Demand was also impacted by ongoing global trade tensions as well as by companies starting to unwind inventories built up in advance of the original Brexit date.’
The outlook from manufacturers didn’t help to inspire any hope in GBP investors either, with firms concerns that a slowdown in the global economy could put further pressure on the factory sector this month.
GBP/CHF Exchange Rate Forecast: Stagnation in UK Construction Sector to Dent Sterling?
Looking ahead, the Pound Swiss Franc (GBP/CHF) exchange rate may come under pressure again tomorrow, with the publication of the UK’s construction PMI.
While the UK’s construction sector only accounts for a very small portion of the UK, the continued stagnation in the sector may alarm some GBP investors as weak commercial demand likely hints that investment remains subdued.
Meanwhile, in the absence of any notable domestic data, any movement in the Swiss Franc this week is likely to be dependent on market risk sentiment, with investors likely to remain well positioned in the safe-haven currency if global trade tensions continue to flare.