Swiss franc falls to fresh 6-week lows despite stronger than expected GDP data

Stronger than expected GDP data for the fourth quarter has not prevented the Swiss currency from falling to 1-1/2-month lows against the dollar and pound on Tuesday.

The Swiss economy expanded 0.6% in the three months to December compared to the revised Q3 growth rate of 0.7% and analysts' expectations of 0.3%.

On a year-on-year basis, the growth rate repeated the third quarter rate of 1.9% while analysts had been expecting 1.7%.

Traders noted the data period was the quarter just ahead of the EUR/CHF floor removal and the big franc rally following the historical 15 January decision will weigh on Swiss growth in the coming quarters.

However, the franc has weakened significantly from the immediate highs it made following the SNB announcement in January.

USD/CHF traded at a high of 0.9616 on Tuesday, its highest since 15 January, which means a more than 10% retreat by the franc from the closing level on the day of floor removal.

GBP/CHF strengthened to 1.4780, translating to a 12% retreat by the Swiss unit from the 15 January closing.

EUR/CHF rose to 1.0759 from Monday's close of 1.0718 and stayed closer to the five-week high of 1.0814 touched on 20 February.

Weak data from Eurozone and continuing dovish bias of the European Central Bank is weighing on the EUR/CHF cross while data from the US as well as the UK are only strengthening the dollar and pound.

The UK construction PMI released on Tuesday showed the index rising to 60.1 for February from 59.1 in January while analysts had been expecting a marginal drop.

Meanwhile Eurozone producer price deflation deepened in January, data showed. The PPI index for the currency region fell 3.4% from a year earlier in January, worse than the 2.6% decline in December and the consensus estimate of -3.0%.