by SignalFactory · February 17, 2020 | 07:06:35 UTC
The
big news of the last week was the shock resignation of Sajid Javid as the
Chancellor of the Exchequer, in response to Boris Johnson’s demand that he
replace his team at the treasury.
While
the sudden resignation of such a high profile ally of the PM would normally
stoke concerns about the stability of the cabinet and drag on the Pound, it’s
thought that Javid’s departure may give Johnson more control over the Treasury,
something which may result in a more ambitious Budget next month.
Jane
Foley, an analyst at Rabobank said:
‘There has been an ongoing rift for a while between (Johnson
advisor Dominic) Cummings and the Chancellor. One of the reasons for the
fallout has been reported that Javid was much more conservative on fiscal
policy.
‘The implication is that if Cummings is more supportive of the
new chancellor then the budget will be more expansionary and then there will be
less need for a Bank of England rate cut.’
Swiss
Franc (CHF) Buoyed by Coronavirus Concerns
At
the same time, the Swiss Franc (CHF) is holding steady this morning as the
safe-haven currency remains in demand amid ongoing concerns regarding the
coronavirus outbreak and its impact on the global economy.
Analysts
have warned that the virus also known as Covid-19 is likely to be more damaging
than the Sars outbreak in 2003.
As
new infections continue to climb, it’s likely the Franc will remain well
supported for the foreseeable future.
GBP/CHF
Forecast: GBP investors Brace for Week Chock Full of Data
Looking
ahead to week’s session, a slew of high impact UK economic data is likely to
act as the main catalyst of movement in the Pound to Swiss Franc (GBP/CHF)
exchange rate.
Coming
up in the first half of the week, the publication of the UK’s latest employment
and CPI figures will be closely watched by GBP investors as a pick-up in wage
growth and inflation is likely to reduce the odds of the Bank of England (BoE)
cutting interest rates in the near term.
This
will be followed by the UK retail sales and PMI releases in the latter half of
the week, where evidence of a sustained ‘Boris bounce’ at the start of the year
is likely to bolster the appeal of Sterling.
Meanwhile,
the only Swiss release of note will be the publication of Switzerland’s
quarterly industrial production figures at the end of the week, where a slowing
of factory output could drag on the Franc.
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