The Pound has risen marginally against the Swiss Franc today but ongoing concerns about how Brexit will actually work have kept these exchange rate gains to a minimum.
News that Swiss unemployment rose in December, against forecasts, has seen investors shy away from the Franc.
But Pound Franc movement last week was negative, with Sterling progressively worsening from an opening rate of 1.25 on Monday to 1.24 on Friday.
The most influential factor on the Pound Franc exchange rate this week has been concern about Brexit, or more specifically, which kind of Brexit the Government will try to implement after it eventually triggers Article 50 before the end of March.
The least-desired of the various proposed types is ‘Hard Brexit’, which sees immigration controls enforced against EU countries at the cost of losing lucrative single market access.
Although Prime Minister Theresa May did not explicitly state that Hard Brexit was the objective, her vagueness in recent statements and interviews has led observers to assume that single market access is not now a ‘deal-breaker’ when it comes to negotiations.
Further worsening the situation have been interpretations about Labour leader Jeremy Corbyn’s comments, with investors also concluding that the Leader of the Opposition has relented on opposing a Hard Brexit.
So far this week Switzerland has been dealt a mixed hand of data.
On Monday, November’s retail sales rose from -0.7% to 0.9% on the year, but slowed from 1.2% to 0.7% on the month.
Tuesday’s big news, December’s unemployment rate, proved disappointing, as estimates of stagnation at 3.3% were upset by the rate actually rising to 3.5%.
While the cost of gold per 100 ounces has climbed from around $1175 to almost $1190 since January 6th, the shock of rising unemployment has seemingly prevented this news from causing a major CHF appreciation against the Pound.
For the rest of the current week and the week to come, Pound Sterling/Swiss Franc exchange rate movement may occur as a result of UK trade balance, construction output and production stats this Wednesday, as well as a UK GDP estimate on Thursday and a Bank of England (BoE) speech on Friday.
Next week, UK inflation figures are due on Tuesday, while the unemployment rate is out on Wednesday. The main Swiss contribution going ahead will be January 18th’s ZEW economic sentiment index.
In summary, UK construction output and industrial production levels are expected to have risen, along with the GDP estimate for the three months to the end of December.
Overall 2017 forecasts have been for next week’s UK inflation and unemployment rate stats to rise.
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