Pure FX Blog

12 April 2018

Pound Hits 22-Month High Versus Franc, as UK Trade Deficit Shrinks

The pound to Swiss franc interbank exchange rate has hit 1.3625 in the past day, its highest since June 23rd 2016, as the UK's trade deficit fell in February. Image credit: Michael Faes.

The pound to Swiss franc interbank exchange rate has hit 1.3625 in the past day, its highest since June 23rd 2016, as the UK’s trade deficit fell in February. Image credit: Michael Faes.

by Peter Lavelle

Welcome to Pure FX’s latest update of the pound to Swiss franc interbank exchange rate.

This tells you when it’s a favourable time to exchange pounds to Swiss francs, for your money transfer!

Sterling flexes its muscles versus the Swissie! The pound to Swiss franc interbank exchange rate has hit 1.3635 in the past day, its highest in 22 months, or since June 23rd 2016.

The pound has strengthened against the franc, because the UK’s trade deficit unexpectedly shrank more than forecast in February, said official statistics yesterday.

Sterling has climbed, because the UK’s trade deficit fell to just -£0.96 billion in February, according to the UK Office for National Statistics on Wednesday, below predictions for -£2.6 billion.

This has lifted the pound, because this was the UK’s smallest trade deficit since September 2017, as UK exporters continue to benefit from rising global demand for British goods.

Sterling has jumped, in particular because even though UK exports fell by -1.3% in February to £52.4 billion, sales of British goods abroad remain highly elevated by historical standards.

“The narrowing trade deficit [is] bolstering positive sentiment and painting a positive GDP picture of the domestic economy,” said analyst Nish Parekh, thus boosting sterling!

Pound strengthens, as BoE’s McCafferty signals hike

Furthermore, the pound has also hit this 22-month high versus the Swiss franc, as a senior Bank of England (BoE) executive has signalled that UK interest rates will soon rise.

Sterling has risen, because BoE policymaker Ian McCafferty has told Reuters this week that the UK’s central bank “shouldn’t dally when it comes to tightening policy modestly.”

This has lifted the pound, because Mr. McCafferty’s comments have bolstered expectations that the BoE will lift UK interest rates by +0.25%, up to 0.75%, as soon as May.

In particular, Mr. McCafferty thinks that it’s time to lift UK interest rates, first because UK wage growth looks set to accelerate to +3.0% in coming months, thus boosting sterling.

In addition, Mr. McCafferty also added that it’s appropriate to hike UK borrowing costs, as the UK economy is benefiting from buoyant global growth, thereby strengthening the pound too.

As a result, the pound to Swiss franc interbank exchange rate has hit this 22-month high, and may rise further!

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Please bear in mind, this article is Pure FX’s opinion only and does not constitute advice. Moreover, the exchange rates referred to in this article are the interbank rates, which are the rates at which banks and financial institutions buy and sell currency to each other. Therefore these exchange rates cannot be accessed by individuals or SMEs, and are not the same rates that Pure FX can offer. To get a free exchange rate quote, call us on +44 (0) 1494 671800, or email peter.lavelle@purefx.co.uk.

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