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Pound Struggles against US Dollar (GBPUSD) and Swiss Franc (GBPCHF)

July 10, 2019 11:14 am | Modified July 10, 2019 11:14 am
CHF, GBP, USD | BY Charlie Murray

Headwinds continue to build against Sterling with worries over Brexit and the broader economy taking a toll on the British Pound to US Dollar (GBP/USD) exchange rate. Today’s UK data releases may be able to provide some respite. The Federal Reserve may also give an indication over its desire to cut rates in a move that could see the US Dollar lose a little ground, while the Pound to Swiss Franc (GBP/CHF) rate is also falling as investors hunt out safe-havens in uncertain times.

British Pound at Two Year Lows

Selling pressure continued to build against the British Pound exchange rate yesterday. Speculation over the need for the Bank of England (BoE) to cut interest rates and renewed fears that a no-deal Brexit could still be seen heaped more pressure on Sterling, which had already been squeezed by disappointing Retail Sales numbers. The slide was sufficient to send the Pound US Dollar (GBP/USD) exchange rate down to levels which hadn’t been sustained since April 2017, and the market will now be looking at today’s data releases to see if there’s further cause for concern. Economic contraction for the second quarter is a real risk, so today’s Gross Domestic Product (GDP) figure for May could act as something of a catalyst for further direction here.

Will FOMC Meeting Minutes Hold Clues Over US Rate Cuts?

Today could see a meaningful suggestion from the Federal Reserve as to the timing of any interest rate cut, with the release of the latest FOMC meeting minutes. Mixed messages continue to emerge from the US economy, with last Friday’s Non-Farm Payrolls suggesting that the economy remains on a strong footing, although sluggish wage growth remains an issue. What’s more, the fact that short-term US Treasury yields have been higher than their long-term equivalents for more than 30 consecutive trading sessions is again a classic warning sign that investors are becoming wary about the sustainability of the protracted bull market. Any clear indication that a rate cut is coming, even if the declines are more modest than may have been predicted previously, would have the potential to see the Greenback reverse some of its recent gains, with the Euro US Dollar exchange rate (EUR/USD) having the potential to pull back from near three-week lows.

Why Did it Move? Pound to Swiss Franc (GBP/CHF)

The British Pound Swiss Franc (GBP/CHF) exchange rate has been under pressure in recent hours. Ongoing concern over global trade and the threat of recession has left investors hunting out safe-havens for their cash, with the Swiss Franc being a classic venue for this. From trading around 1.2450 in the early hours of Tuesday morning, the cross now sits around 1.2350.

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