The Swiss Franc to Pound Sterling (CHF/GBP) exchange rate has been trending higher after weak UK data inspired a decline in Sterling sentiment. However, Switzerland hasn’t had a massively positive day either as the KOF Autumn Forecast suggested the employment sector was suffering from malaise and downwardly revised economic growth forecasts due to sluggish expansion.
The KOF report read: ‘The KOF has made a slightly downward revision of its forecast for Swiss economic growth in the coming year. It now expects GDP [Gross Domestic Product] growth of 1.7% this and next year (June forecast: 1.8% or 2.0%) and 2.1% in 2016. The reason for this is, on the one hand, the weaker international context and, on the other hand, data revisions. The unemployment rate will hardly change in the coming months. The general increase in prices continues to be low.’
Poor Eurozone Performance Stifles Swiss Growth
Eurozone fears have hindered Swiss economic growth recently and with the currency bloc’s largest economy, Germany, recently undergoing a drastic slow-down, the Alpine economy was likely to suffer.
The state secretariat for economic affairs (SECO) cut its growth forecast recently, stating: ‘As a result of the continuing fragility of the global environment, in particular the faltering recovery in the Euro region, the Swiss economy has lost some of its momentum since the beginning of 2014.’
Furthermore, Switzerland’s biggest bank, UBS, has missed profit estimates as it’s been wrestling with allegations that it aided clients in tax evasion. The bank has allocated $1.94 billion for fines relating to the investigation in an attempt to ease investor fears. However, UBS has posted a 32% jump for profits in the third quarter.
Chief Executive Officer Sergio Ermotti commented: ‘We are making progress. We are today in a position to have a better estimate of how to address those issues. In some cases we may be able to reach conclusions in the foreseeable future.’
Pound Exchange Rate Weakens as UK Housing Market Cools
Meanwhile, Sterling softened as Mortgage Approvals fell below forecasts to a 14-month low. Approvals were recorded at only 61.3K in September although economists’ were expecting a minimum of 62.0K after August’s 64.1K.
However, housing prices have been cooling recently, and Net Lending Secured on Dwellings figures also fell far lower than economists’ predictions. Home lending reached only 1.8B in September, short of the 2.1B forecast and August’s 2.2B making it the smallest rise since the beginning of the year.
Economist Howard Archer commented on Wednesday’s figures, stating: ‘Evidence of at least a temporary housing market slowdown is becoming more pervasive. With housing market activity clearly off its early-2014 highs, we suspect house prices will generally rise at a more restrained rate over the coming months. Specifically, we expect house prices to rise by around 1% quarter-on-quarter in the fourth quarter of 2013. We see house prices rising by around 5% in 2015.’
Pound to Swiss Franc (GBP/CHF) Exchange Rate Forecast
Thursday will see the release of the UBS Consumption Indicator which is used to gauge consumer spending in Switzerland. In August the index resided at 1.35, below the 1.5 long-term average. Furthermore, the KOF Leading Indicator is also scheduled for publication and is expected to rise from 99.1 to 99.2 in October. German Unemployment Change and Unemployment Rate figures may also factor into Swiss Franc exchange rate movement.
Meanwhile, the only significant piece of UK data left for publication this week is the UK Consumer Confidence Survey, out on Friday. Swiss National Bank (SNB) third quarter earnings will be released shortly after as well as the SNB Third Quarter Currency Allocation. Eurozone Consumer Price Index figures released on Friday could also impact the CHF/GBP currency pair.
The GBP/CHF foreign exchange rate is presently trending in the region of 1.5251, reaching session highs of 1.5286 and brushing lows of 1.5247.
Swiss Franc (CHF) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,Swiss Franc , 1.5257,
US Dollar,,Swiss Franc , 0.9451,
Euro,,Swiss Franc , 1.2057,
Australian Dollar,,Swiss Franc , 0.8409,
New Zealand Dollar,,Swiss Franc , 0.7503,
[/table]
