Surge in Market Optimism Over Covid-19 Vaccine News Boosts Pound Swiss Franc (GBP/CHF) Exchange Rate
The Pound Sterling to Swiss Franc (GBP/CHF) exchange rate saw a sharp surge of more than 1% in the wake of Pfizer’s Covid-19 vaccine announcement.
Market confidence leapt as Pfizer reported that its interim results showed a 90% effectiveness in preventing infection among its participants.
This level of effectiveness exceeded the hopes of investors, encouraging hopes that an end to the current pandemic could soon come into sight.
Although the vaccine trials are set to run for some time yet, until there are 164 confirmed cases of Covid-19 within participants, this sense of hope weighed heavily on the safe-haven Swiss Franc (CHF).
With uncertainty over the US presidential election also at an apparent end thanks to Jo Biden’s victory the GBP/CHF exchange rate found a strong foothold at the start of the week.
Rising UK Unemployment Rate Forecast to Dent GBP/CHF Exchange Rate
However, the mood towards Pound Sterling (GBP) may well sour on Tuesday with the release of the latest set of UK labour market data.
Forecasts point towards the UK unemployment rate rising from 4.5% to 4.8% in September, highlighting a continued upward trend in job losses.
Even though the government recently extended its furlough scheme until March, aiming to support businesses through the second lockdown, an increase in the unemployment rate could dent GBP exchange rates.
As long as underlying signs continue to point towards a growing weakness within the UK labour market investors may struggle to find reason to favour the Pound over its rivals.
Even so, a solid month of growth in average earnings may help to limit the negative impact of a rising unemployment rate in the short term.
As stronger levels of consumer spending have previously helped to shore up the UK economy evidence of increasing buying power among employees would bode well for the economic outlook.
Reversal of Markets’ Covid-19 Vaccine Gains Set to Boost Swiss Franc
The Swiss Franc may struggle to regain its footing in the coming week, given a lack of fresh domestic data releases.
A persistent sense of market confidence could see CHF exchange rates remain biased to the downside in the absence of safe-haven demand.
Without a resurgence in market jitters the Franc looks set to trend lower across the board in the near term.
However, once the initial impact of the Pfizer announcement starts to fade this could offer the Swiss Franc some room for recovery.
If the market bounce sees a correction as investors factor in the prospect of a commercially available vaccine still being some months away the GBP/CHF exchange rate could come under pressure.
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