The Pound was flat against the US Dollar (GBP/USD) on Thursday after a rally above 1.42 in Wednesday’s European trading, and climbed higher against safe-haven currency the Swiss Franc (GBP/CHF).
Investors are awaiting key pieces of economic data which might impact how the Bank of England (BoE) determines its next monetary policy decision. Highly significant labour market data and inflation data will both reach markets next week and could create some dramatic sterling shifts. While the UK unemployment rate is forecast to remain the same, some economists have suggested an increase in inflation from 2.7% to 2.8% will take place. Higher consumer prices could encourage the central bank to raise interest rates and so markets will be carefully analysing the data.
Swiss National Bank Suggests CHF Still Safe-Haven Currency
Meanwhile, in Switzerland, the nation’s Unemployment Rate dropped from 3.2% to 2.9%, defying forecasts of a fall to 3.0%. It’s worth noting, however, that the seasonally adjusted unemployment figure remained stable at 2.9%.
The Swiss Franc has softened somewhat this year, yet the Swiss National Bank (SNB) firmly believes the Swissie is still a safe-haven currency. SNB board member Andrea Maechler said:
‘The pressure on the Swiss franc is still there, the currency has devalued and the overvaluation has reduced, but the franc is still a safe-haven.’
The SNB has made attempts in recent years to jawbone the currency lower, since the decision to remove the cap on the Swiss Franc to the Euro (EUR) was removed. The removal of the tie has made wrangling the strong Franc much more difficult, pushing the SNB to implement negative interest rates.
US Dollar Reaches Two-Year High Versus Rouble (USD/RUB) on Syria Threats
Stateside, markets are awaiting news as to whether the US will conduct air strikes on Syria. With prospects of global conflict on the cards, investors could look to place their faith in safe-haven assets such as the Franc, Japanese Yen (JPY) or commodites such as gold, at signs of escalation.
Russia vows to shoot down any and all missiles fired at Syria. Get ready Russia, because they will be coming, nice and new and “smart!” You shouldn’t be partners with a Gas Killing Animal who kills his people and enjoys it!
— Donald J. Trump (@realDonaldTrump) 11 April 2018
The situation in Syria has driven oil prices to three-year highs reaching over $73 per barrel overnight, the highest level seen since December 2014. However, despite the threats of conflict between the US and Russia, the Russian Rouble (RUB) has managed to reclaim some ground on Thursday after losing some strength last week on account of fresh US sanctions. Wednesday’s trading saw the Rouble to US Dollar (RUB/USD) exchange rate hit a two year low following some of Trumps tweets, but has propped itself up today.