The Swiss Franc (CHF) finds itself on the back foot against the Pound (GBP) and most of its other peers today, in the wake of Switzerland’s latest consumer price index (CPI).
According to data published by Switzerland’s Federal Statistics Office (FSO) the CPI contracted by 0.2% in July after stalling in June.
While this beat market forecasts of a slide to –0.4%, this still saw the country slide back into a state of deflation at the start of the third quarter.
The disappointing CPI figures in turn bolster expectations the Swiss National Bank (SNB) will continue to hold interest rates below zero for the foreseeable future.
Pound (GBP) Supported by Upbeat PMI Figures
The Pound (GBP) has been able to capitalize on the Swiss Franc’s (CHF) weakness this morning following the publication of the UK’s latest PMI figures…
While July’s finalized figures saw the UK’s manufacturing index revised down from 53.6 to 53.3, this was still a healthy reading and buoys hopes that the UK’s factory sector is on the road to recovery.
However, the PMI release also highlighted concerns that the recovery in the UK’s factory sector could be undermined in the coming months as the unwinding of the government’s furlough scheme threat thousands of jobs in the sector.
GBP/CHF Exchange Rate Forecast: BoE Rate Decision in Spotlight:
Looking ahead to the rest of the week, the main catalyst of movement in the Pound to Swiss Franc (GBP/CHF) exchange rate looks to be the Bank of England’s (BoE) latest interest rate decision.
The BoE is widely expected to keep interest rates on hold this month as policymakers note the rebound in economic activity through June and July as the lockdown was unwound.
However, the real focus for GBP investors will be on the BoE’s outlook for the remainder of 2020 and whether it feels like more stimulus may be necessary or if it comments on the potential for an unconventional monetary policy such as negative interest rates.
Meanwhile, the Swiss Franc could find itself back in demand later this week, as renewed coronavirus concerns start to push investors back towards safe-haven assets.
GBP/CHF SHORT (Sell)
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