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Pound Sterling to Swiss Franc (GBP/CHF) Exchange Rate Forecast to Dive after Swiss Trade Balance Betters Estimates

Published: 21 Jul at 4 PM Tags: Pound Sterling, Euro Exchange Rate, Currency Exchange, Forex, Swiss Franc Exchange Rate, Euro Crisis, Exchange Rates,

The Pound Sterling to Swiss Franc (GBP/CHF) exchange rate declined by around -0.8% on Tuesday afternoon.

Last week the Pound rallied versus its major peers amid positive domestic data results and hawkish sentiment form Bank of England (BoE) officials. The considerable appreciation caused traders concerns regarding overvaluation. The BoE Monetary Policy Committee (MPC) has already cited the high-valued domestic asset as one of the stumbling blocks preventing a benchmark interest rate hike. As a result of these mounting concerns, the Pound softened versus its major peers. A combination of profit-taking and mixed domestic data results has seen the British asset continue to decline versus its currency rivals on Tuesday.

Whilst British finances data produced a mixed-bag of results, the fact that government borrowing dropped compared with this time last year has supported positive sentiment towards Chancellor George Osborne’s plan to clear the budget deficit. Whilst the Pound has not gained in response to the data, the prospect of improving government finances is likely to promote demand fopr the British asset in the long-term.

The Pound Sterling to Swiss Franc (GBP/CHF) exchange rate is currently trending in the region of 1.4884.

Despite the fact that the easing tensions in Greece has seen dampened demand for safe-haven assets, the Swiss Franc appreciated versus many of its currency competitors. This will not be a welcome sight for Swiss National Bank officials who have been combating ‘Swissie’ (CHF) overvaluation since the central bank removed its Euro cap.

Tuesday has seen the Franc appreciate in response to positive domestic data results. June’s Trade Balance was forecast to see the surplus reduced from 3.41 billion to 2.50 billion, but the actual result climbed to 3.58 billion. June’s exports surged by 5.9% compared with this time last year. Conversely, imports cooled by 7.7%. In real terms, both imports and exports advanced by 3.1% and 8.8% respectively.

Looking ahead, Wednesday will be significant for those trading the Pound Sterling to Swiss Franc (GBP/CHF) exchange rate. The Bank of England (BoE) publishes minutes from the most recent policy meeting. Many analysts, including those from CitiFX, predict that the minutes will be hawkish given positive sentiment from BoE officials last week. A complete absence of Swiss economic data ought to see the Franc subject to changes in response to market sentiment.

The Pound Sterling to Swiss Franc (GBP/CHF) exchange rate was trending within the range of 1.4875 to 1.5016 during Tuesday’s European session.