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.
GBP/CHF SHORT (Sell)
ENTER AT: 1.2814