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GBP/USD Above 1.40, JPY Outdoes CHF as a Safe-Haven Asset, GBP/CHF Rallies

February 19, 2018 11:53 am | Modified September 4, 2018 7:19 am
CHF, GBP, JPY, USD | BY Ashleigh Fox

The Pound exchange rate has begun the week above the 1.40 level against the US Dollar (GBP/USD), while climbing against the Swiss Franc (GBP/CHF) and Japanese Yen (GBP/JPY), recovering from weaker-than-forecast UK Retail Spending figures last Friday.

The week ahead could see the Pound swing significantly on economic events, with the Bank of England (BoE) Governor Mark Carney scheduled to speak twice, once while accompanied by a host of other BoE officials including Chief Economist Andy Haldane. Markets will closely watch the comments from the central bank as they try to gauge the likelihood of interest rate increases in the near-term.

Meanwhile, US markets are closed today for President’s Day, but there’s the opportunity for some USD movement later in the week with the release of the Federal Reserve’s latest Federal Open Market Committee (FOMC) meeting minutes on Wednesday. A few other moderately influential ecostats will also hit markets as the week progresses, and politics could play their part in USD exchange rate fluctuations.

Another big event for Cable will be the UK’s raft of labour market data due out on Wednesday. Average weekly earnings will be closely watched as inflation remains stubbornly high creating a squeeze on households. Thursday will continue the influential data stream with the UK’s latest Gross Domestic Product (GDP) growth numbers.

So far in Monday’s European session, the Pound to US Dollar (GBP/USD) exchange rate has reached highs of 1.4048. Additionally, Sterling has been rallying against the Swiss Franc (GBP/CHF), currently around 0.75% higher and attaining levels of 1.3026 at its pinnacle.

In terms of safe-haven assets, investors have been leaning towards the Japanese Yen (JPY) over the Franc. The Swiss National Bank (SNB) continued to suggest the Franc is ‘highly valued’, whereas the Bank of Japan (BoJ) looks to begin normalising its monetary policy. During February when stock markets were experiencing a selloff, the Franc dropped by around 1.9% in a week versus the Yen.

ING Currency Strategist Viraj Patel commented:

‘Things are starting to turn the corner in the Japanese economy. The Swiss Franc doesn’t have those dynamics. The SNB will be the last ones to even consider moving. They’re at the back of the queue when we look at a group of countries looking to normalise monetary policy.’

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