GBP/CHF Remains Rangebound After Brief Dip
Sterling lost ground yesterday after the release of poor retail sales data before recovering to trade flat against the Swiss Franc, as it has done for the past two weeks.
The graph above is deceiving as it looks as though there’s been a fair bit of movement with the currency cross. In fact, you’ll notice that the figures on the Y axis are within a fairly tight range trading levels at the end of the week were within a percent of trading levels at the start.
However, there have been brief spikes and dips. Yesterday it was announced that retail sales in the UK had dropped by 0.7% month/month in March, slightly worse than the 0.6% decline that was expected. Sterling weakened temporarily as a result, losing around 0.5% against the Franc. The poor retail sales were blamed on the miserable weather the UK experienced throughout March. It was the coldest March since 1962, with the coldest Easter Sunday since records began. This is said to have discouraged people from hitting the high streets, instead preferring the warmth of their homes.
Worst effected by the poor weather were sales at non-food stores, reporting a 3.8% decline month/month, the weakest figure since January 2010. Incidentally, January 2010 was also noted for its particularly bad weather and retail figures then rose sharply the following month. The poor retail sales figures increased concerns that UK Gross Domestic Product figures released next week will confirm that the UK has entered recession for the third time in four years after a negative reading of 0.3% for the last quarter of 2012.
“There has been a deterioration in economic data and if GDP data next week signals a triple-dip recession it increases the chance of more quantitative easing in May,” said Kathleen Brooks, research director at Forex.com.
With the threat of another round of quantitative easing on the cards, and the imminent release of UK GDP figures, the next week could prove to be volatile for the GBP/CHF cross. Contact me today by filling out the enquiry form on the right to find out how you can limit your exposure to adverse movements in the markets, making the most out of your currency purchase.