Drop in Swedish Consumer Confidence Bolsters GBP/SEK
The Pound Swedish Krona (GBP/SEK) exchange rate rallied this morning, following a slump in Swedish consumer confidence.
At the time of writing GBP/SEK is up by around 0.3% this morning, with the pairing recovering most of Monday’s losses.
Slide in Household Sentiment Dents Swedish Krona (SEK)
The Swedish Krona found itself ceding ground again the Pound this morning as markets reacted to Sweden’s latest confidence figures.
While Business Confidence was show to have edged up in this month, investors were more focused on a sizable fall in domestic Consumer Confidence.
The latest reading saw the consumer sentiment index tumble from 106.7 to 104.7 in February, falling below expectations it would hold steady and reaching its lowest levels since September.
The Krona losses this morning were further compound by the release of Sweden’s latest trade balance figures, which saw December’s trade deficit revised up from –SEK1.7bn to –SEK3.1bn.
With January’s deficit of –SEK1.8bn also disappointing investors who had expected last month’s reading to show a SEK0.9bn surplus.
Sterling (GBP) Investors Remain Mindful of Brexit Pitfalls
Meanwhile the Pound’s gains this morning remain tentative amidst a swell of Brexit uncertainty that threatens to drive the UK currency lower once again.
Markets remain particular cautious this week as they await the release of a draft Brexit withdrawal treaty from the EU on Wednesday.
Reports suggest that the draft could prove to be a headache for Theresa May’s government particularly in regards to the Irish Border.
This is because the document is likely to lay out a proposals to avoid a land border on Ireland but will not mention avoiding a hard borders between Northern Ireland and the UK.
This is likely to anger the DUP and could test the party’s agreement with May to prop up her government.
GBP/SEK Forecast: Krona to Bounce Back on Upswing in GDP?
Looking ahead the GBP/SEK exchange rate could find itself quickly relinquishing today’s gains as Sweden publishes its latest GDP figures on Wednesday.
Economists forecast that Sweden’s latest GDP reading will show that annualised growth ticked up from 2.9% to 3.4% in the fourth quarter, likely bolstering the appeal of the Swedish Krona.
However the SEK exchange rate may still feel some drag tomorrow as Sweden’s latest retail sales data is expected to show that sales declined for the second consecutive months in January.
Meanwhile the Pound may struggle in the second half of this week’s session as the UK’s latest PMI figures are expected to show that private sector activity slowed this month.