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Pound US Dollar Exchange Rate Softer as US Production Picks Up, GBP/CHF Falls

May 16, 2018 4:12 pm | Modified September 4, 2018 7:18 am
CHF, GBP, USD | BY Ashleigh Fox

The Pound to US Dollar (GBP/USD) and Pound to Swiss Franc (GBP/CHF) exchange rates have been softening in Wednesday’s European session after a host of US data and ahead of the Swiss National Bank’s (SNB) Chief Thomas Jordan’s speech in Zurich. 

US Economic Data Buoys Hopes Q2 Economic Activity will Enjoy an Upswing

US Housing Starts contracted by -3.7% in April, a much bigger decline than the -0.7% forecast. Meanwhile, US Building Permits also dropped by -1.8%, slightly less than the -2.1% expectation. The Industrial Production ecostat ticked up by 0.7% in April, just a nudge above the 0.6% prediction. The Manufacturing Production number also rose, coming in at 0.5% in line with forecasts.

The strong industrial number is buoying hopes that the second quarter may have a healthy bounce of economic activity. The Dollar index has hit a five-month high today as investors expect higher US interest rates in comparison to other nations.

However, the Japanese Yen and Swiss Franc both gained some favour in Wednesday’s trading as fresh concerns over the situation in North Korea encroached on market sentiment. There have been reports that North Korean leader Kim Jong Un could fail to attend the summit with US President Donald Trump next month. It’s been suggested by Pyongyang that Kim Jong Un won’t attend it the US insists on denuclearisation.

North Korea has just cancelled high-level discussions with South Korea only hours ahead of the event. Korean news channels also stated that the US’s ‘provocative military racket’ was placing the June meeting at risk. Investors will watch how the story unfolds which could create further demand for safe-haven assets.

In Thursday’s session comments from members of the US Federal Reserve could create some market movement, as well as Initial Jobless Claims, Continuing Claims, the US Leading Index, and Philadelphia Fed Business Outlook data.

Swiss National Bank (SNB) Interest Rate Forecasts

Swiss National Bank Chief Thomas Jordan is due to speak this afternoon and any comments from him on monetary policy could create some Swiss Franc movement. Bloomberg’s latest survey of economists has shown that expectations for a SNB rate hike have been brought forward but still lie a way off in Q3 of 2019 rather than Q4.

The Pound to Swiss Franc (GBP/CHF) exchange rate is trading at 1.3491. The Pound to US Dollar (GBP/USD) exchange rate is trending in the region of 1.3480.

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