If sterling were to climb higher next week then its best bet would be against a weaker currency like the Swiss franc. The franc weakened a little yesterday after the Swiss National Bank reiterated its commitment in keeping monetary policy extremely loose and intervening in the forex market if necessary to weaken the currency. Thus, the British pound/Swiss franc (GBP/CHF) currency pair remains fundamentally supported.
After an eventful week, sentiment among market participants has evidently improved. Perceived safe-haven assets like gold, Japanese yen and Swiss franc, have all come under pressure in recent days, while the global stock indices have bounced back after last week’s falls. Granted, we are not totally out of the woods yet, and equity prices remain overstretched on historical basis, but there’s definitely fewer reasons for investors to fret over than at the start of the week. After all, there’s now urgency from North Korea to denuclearize and Donald Trump has agreed to meet Kim Jong-un face-to-face by May.
The official U.S. monthly non-farm payrolls report will be released on Friday, Sept. 1. Due to the fact that some of the key leading indicators will be released after the NFP, it is even more difficult to predict this month's headline figure with any reasonable degree of confidence.
With the Bank of England and European Central Bank slowly turning neutral, maybe it is time the market turned its attention to the Swiss franc again because the SNB is still pretty much dovish. Interest rates are unlikely to be raised anytime soon due to the lack of inflation in Switzerland. What’s more, the Swiss National Bank is still intervening in the forex markets as it firmly believes the franc remains overvalued.