The Pound has made gradual gains against the Swiss Franc on July 10th, rising from an opening exchange rate of 1.2425 to 1.2449 later in the day.
This Pound strength against the Franc has largely been caused by Swiss economic deterioration, given that the latest UK news has been somewhat negative overall.
Chief among the latest issues has been the continuation of Brexit negotiations in the area of citizens’ rights. UK Prime Minister Theresa May initially proposed a deal for EU citizens to eventually gain citizenship after 5 years in the UK, but this has since been roundly criticised by a number of MEPs.
The argument is that this proposal is incompatible with EU attitudes on freedom of movement, so no reciprocal deal could be made for UK citizens in the EU.
In response to MEPs criticising the UK’s offering, the UK department for Brexit (DExEU) has responded by saying that the MEPs are omitting key points of the UK’s plans for EU citizens.
The week’s main UK data will be Wednesday’s unemployment and earnings figures for May. The main focus is on earnings, which are expected to show a post wage growth under 2%. Such a result would put earnings potentially 1% lower than the rate of inflation, which was 2.9% in May.
Such a development would heighten fears of the UK economy suffering, as it could lead to more insecure borrowing and less retail spending due to the wage squeeze.
Falling commodity prices have caused the Swiss Franc’s downfall today, with the cost of gold steadily falling since it peaked in early June.
The high of almost $1300 per 100 ounces at the start of June has since given way to the latest low of around $1210 by July 10th, which has had a growing negative impact on the Franc’s value.
Elsewhere, Swiss economic confidence has also taken a knock from news about Swiss banks UBS and Credit Suisse.
Both institutions have cut their shares of the Swiss mortgage market, due to increased competition at a time of low borrowing costs. Commenting on the situation has been Swiss National Bank policymaker Fritz Zurbrugg;
‘[If interest rates rise] there is the risk of a substantial price correction. This could result in credit losses at the banks that provide funding for such investors’.
This week is not expected to bring much Swiss data, so the Franc may be influenced the most by further gold price fluctuations throughout the week.