Risk of Future GBP/CHF Drop on Falling UK Activity Readings
The Pound (GBP) has fallen by -0.6% against the Swiss Franc (CHF) today and could make additional losses when next week’s UK PMI stats come out.
Measuring activity in the manufacturing, construction and services sectors, these readings are all expected to show a slower pace of economic activity.
The PMI stats are out over Monday to Wednesday, respectively, and if they all drop then the Pound could follow suit with losses against the Swiss Franc.
The services sector PMI is the most important of the three, as services sector activity is the single largest contributor to UK economic growth.
The reading is of such high importance that even if manufacturing and construction slowdowns are reported, the Pound could rise on a higher services PMI.
Will Slowdown in UK Wage Growth Cause Drop in GBP/CHF Exchange Rate in October?
Looking beyond next week, one of the next major UK economic announcements will come on 16th October in the form of average earnings data for August.
A slower pace of wage growth without bonuses has been forecast, alongside no change from 2.6% for the reading with bonuses included.
Slowing wage growth in both cases could drain GBP trader confidence and weaken the UK currency.
A slower pace of wage growth means that the Bank of England (BoE) is less likely to raise interest rates in the near-future, due to reduced household resilience.
Swiss Franc to Pound Exchange Rate Forecast: Will CHF/GBP Rise on Swiss Retail Sales?
For Swiss Franc traders, the CHF/GBP exchange rate could improve in the coming week when Swiss retail sales data comes out on Monday.
August’s monthly and annual sales readings are both expected to show growth, in the form of respective rises from -1% to 0.6% and from -0.3% to 0.4%.
If these readings match up with forecasts, the Swiss Franc could appreciate due to the positive implications of sales growth rising out of negative ranges.
Monday will also bring a measurement of Swiss manufacturing sector activity, although this could prove less supportive if it slows as forecast.
September’s SVME manufacturing PMI is tipped to show a slowdown from 64.8 points to 60.8, which will still indicate sector growth but at a slower rate.
Will Swiss Inflation Rate Slowdown Trigger CHF/GBP Exchange Rate Decline?
Going from the start of next week to the end, the Swiss Franc (CHF) could fall back against Pound Sterling (GBP) on Friday when Swiss inflation rate data is due out.
September’s figures are predicted to show a slowdown for the year-on-year reading, from 1.2% to 1.1%; the month-on-month figure isn’t expected to shift from 0%.
Slower annual inflation could drain CHF trader confidence and enable a GBP/CHF exchange rate rise, given the implications for Swiss National Bank (SNB) policy.
The SNB has held interest rates at -0.75% since 2015 and lower inflation won’t put any pressure on bank officials to consider raising rates.