GBP/CHF: the worst of the week, down more than 350 pips

A stronger Swiss franc, that near the end of the week keeps reaching new highs, pushed GBP/CHF further to the downside on Friday. The pair was already deep in negative territory for the week. The pound lost 2.8% during the week against the Swiss, the worst week since September 2016. 

Between the ECB and BoE 

The Swiss franc extended gains after the European Central Bank meeting. Draghi boosted the euro, the Swisy, like usually does, followed it. EUR/CHF reached multi-month highs but found a strong resistance around 1.1050. On the other side, EUR/GBP broke relevant resistance levels and today moved closer to 0.8900. The rally of the pair contributed to weakening the pound. 

UK data failed to boost expectations for a rate hike from the Bank of England. Earlier during the week, UK CPI data (2.6% y/y against 2.9%) pushed the pound sharply to the downside. On Thursday an upbeat report on retail sales, offered support just for a few minutes to the currency, that continued to slide. 

With Brexit negotiations starting surrounded by political uncertainty and negative real wage growth, many analysts point out, that is hard to see a rate hike from the BoE coming. 

UK CPI eases to 2.6% y/y in June, misses expectations

UK retail sales rebound sharply in June, a Big beat on expectations

BoE: threat of a rate hike reduced - ING

GBP/CHF collapse 

The pair opened on Monday near 2-week highs, above 1.2600. Then it started the sharp reversal. It dropped constantly during all week. Recently bottomed at 1.2267, the lowest in four weeks. The pair is near the 1.2250 area, that is a key support, that capped the decline several times in March and also in June. A break lower would put 2017 lows on the radar (1.2100/10).