Swiss Franc weakens against Pound Sterling after UK data surprises

• The Swiss Franc takes a step lower versus the Pound on Thursday after UK data beats expectations. 
• UK lending and services data both come out higher, suggesting less pressure on the BoE to cut rates.
• The safe-haven Swiss Franc weakens after strong US and China data increases investor risk appetite. 

The Swiss Franc (CHF) fell against a strengthening Pound Sterling (GBP) on Thursday after risk sentiment improved on the back of strong global macroeconomic data, in particular data from the United Kingdom (UK). 

Overall – and despite simmering geopolitical tensions – the positive boost to investor risk appetite from the figures was not as advantageous for the safe-haven Swiss Franc as the risk-sensitive Pound. 

The day started with China recording a higher-than-expected Services PMI for December showing the world’s second largest economy holding its form. This was followed by stronger-than-forecast US labor market data. 

Sterling rose in most pairs on the back of strong lending data, which showed people continuing to borrow and take out mortgages, seemingly unfazed by higher interest rates. A strong Services PMI result seemed to turn the tables on the somewhat negative narrative that has bedeviled the UK economy since growth data was revised down to show a contraction in GDP in Q3. 

Daily digest market movers: Swiss Franc weakens versus Pound Sterling after UK data surprises  

• The Swiss Franc weakens versus the Pound after global macroeconomic data gives investors cause for optimism on Thursday.  
• Safe-havens like Gold and the Swiss Franc take a hit whilst risk-on currencies like Sterling rise. 
• China Caixin Services PMI rises to 52.9 in December, easily beating estimates of 51.6 and November’s 51.5. Eurozone Services PMI is equally positive. 
• US private payrolls data beats estimates, with ADP Employment Change showing the economy added 164,000 new employees in December, against 115,000 expected. In November, 101,000 were added. 
• UK lending data seems to suggest borrowers are still taking out loans despite higher interest rates. 
• Net Lending to Individuals rises GBP 1.9B in November, beating forecasts of GBP 1.6B; Consumer Credit shows a GBP 2.005B increase when GBP 1.400B had been expected; and Mortgage Approvals rise 50.067K when compared to the expected 48.500K. 
• The robust lending data suggests there will be less pressure on the Bank of England (BoE) to bring down interest rates in order to stimulate an economic recovery.  

Swiss Franc technical analysis: GBP/CHF breaks down, remaining in bearish long-term trend

GBP/CHF – the number of Swiss Francs that one Pound Sterling can buy – shows a small recovery this week despite the overall bearish tenor of the chart. 

The pair is arguably in a downtrend on the weekly chart below despite a recovery taking place on the daily and intraday charts. 

Pound Sterling vs Swiss Franc: Weekly Chart 

GBP/CHF has broken below the lower line of a falling channel or range-bound consolidation that has been forming since 2022. If the break holds, this suggests a risk the pair could fall to 1.0400 eventually, which is the 61.8% extrapolation of the range to the downside. A break below the 1.0637 lows would signal a continuation down towards that target. 

The pair may be encountering resistance from the lower boundary of the wedge/range at the current market level as it rises back up to it after the breakdown last week. 

The MACD momentum indicator is showing a decline in line with price, which supports the longer-term bearish picture.