Wow what a day as the Swiss National Bank (SNB)’s decided to abolish the minimum exchange rate for the Swiss franc to the euro. This resulted in sterling hitting a fresh six-year high against the euro but lose over twenty cents against the Swiss franc during the course of a very busy day. Sterling also continues to struggle against the US dollar. We will see no major economic data released from the UK today, but with the markets still reeling from yesterday’s announcement from the SNB, we can expect to see significant movement throughout the day.
A brief roundup of the week’s events is as follows. Poor inflation data on Tuesday threatened to send sterling falling sharply across the board. However, sterling was able to recover much of its lost ground after Bank of England (BoE) Governor Mark Carney assured investors that low inflation would not adversely affect the UK economy. Poor data from elsewhere buoyed sterling on Wednesday, with poor retail sales from the US in particular giving sterling a significant boost over the US dollar. Movements on Thursday were dominated by the Swiss National Bank (SNB)’s decision to abolish the minimum exchange rate for the Swiss franc to the euro. With euro markets rocked by this decision, sterling broke the 1.30 barrier to rise to a fresh six-year high against the euro. In contrast, an unexpected increase in unemployment claims from the US was not enough to prevent the dollar from reversing Wednesdays’ losses.