The Swiss Franc is trending steadily lower versus the stronger Pound on Thursday, in the second straight session of declines. Swiss Franc settled on Wednesday 0.5% weaker versus sterling.
At 11:15 UTC, GBP/CHF is trading +0.7% higher at 1.2063. The pair is trading at the top end of the daily traded range of 1.1976 – 1.2069 and at a three-day high as the SNB posted record losses and despite dire PMI data from the UK.
UK In Historic Contraction
The Pound is bounding higher despite data revealing the extent of the coronavirus hit to the UK economy, so far. The IHS Markit/CIPS flash UK composite purchasing managers index, which measures both service sector and manufacturing sector output and accounts for around 90% of UK economic activity, plunged to a new record low of 12.9 in April. This was down from 36 in March, and nowhere near analysts’ expectations of 31.4.
Given the size and scale of the contraction of the PMIs in April, economists predict that the UK economy contract by -7% quarter on quarter. However, the reality is that it could contract significantly more when those who work on a self-employed basis are included.
The data comes as the UK business secretary Alok Sharma, has revealed that 2.8 million workers from 387,000 companies are to be paid through the governments furlough scheme. The scheme only started receiving applications two days ago.
Despite reems of bad news the pound is showing resilience. The horrifying data is expected to push the government towards an exit strategy.
Swiss Franc Slips As SNB Posts Largest Ever Quarterly Loss
The Swiss Franc is under pressure as corporate earnings provided a clue as to the havoc that coronvirus crisis was having on Swiss form and the economy. The Swiss National Bank reported a record quarterly loss of 38.2 billion Swiss Francs owing to exchange rate related losses and the franc and as the bank’s equity holding lost 31.9 billion francs in value. This is the biggest quarterly fall suffered by the Swiss National Bank since it was founded over 100 years ago.
The loss is unlikely to change the Swiss National Bank’s policy of currency intervention and negative rates. The goal of the SNB isn’t to make profits its aim is to prevent a rapid rise of the franc.