GBP/SEK Exchange Rate Rangebound, Riksbank Signals Caution Despite Rate Hike
The Pound Swedish Krona (GBP/SEK) exchange rate held steady today, with the pairing currently trading around 12.322Kr after the Riksbank lifted its interest rate from -0.25% to 0%, ending negative interest rates.
Analysts at The Wall Street Journal commented:
‘On Thursday, the Riksbank raised the key rate to zero from minus 0.25%. The bank moved because a majority of its policymakers expect inflation to be close to its 2% target over the coming years. But it signalled caution, indicating it has no plans to raise its key rate further in the coming year.’
However, the Swedish Krona (SEK) failed to rise against the Pound (GBP), with the Eurozone’s economy and a global economic slowdown continue to leave many SEK investors feeling cautious.
The move from the Riksbank is also at odds with other major central banks such as the European Central Bank and the US Federal Reserve, which are both awaiting further clarity on US-China trade developments.
GBP/SEK Exchange Rate Flat, UK Retail Sales Fall to 19-Month Low in November
The GBP/SEK held steady today despite the release of November’s UK Retail Sales figure, which fell from 0% to -0.6%, a 19-month low.
Emma-Lou Montgomery, Associate Director at Fidelity International, commented:
‘Retailers are in for a nail-biting end to an already difficult year. Today’s UK retail sales figures show the affect that Brexit and the December election have had on consumer purse strings. In a climate of uncertainty spending has clearly taken a back seat.’
However, Sterling investors are bracing for today’s interest rate decision from the Bank of England (BoE), with the rate expected to remain at 0.75%.
We could see the GBP/SEK exchange rate ease, however, if the BoE drops any hints of a possible rate cut in 2020.
Brexit developments also continue to drive the Pound today, with markets becoming increasingly cautious over a UK-EU no-deal after JP Morgan said that the odds were now ‘uncomfortably high’.
GBP/SEK Outlook: Could Weak UK Consumer Confidence Sink the Pound?
Looking ahead to tomorrow, Sterling traders will be awaiting the UK GfK Consumer Confidence figure for December, which is expected to ease at -14, potentially dampening confidence in the UK economy into the New Year.
Meanwhile, Swedish Krona traders will be looking ahead to tomorrow’s Swedish Retail Sales figures for November, with any signs of improvement likely uplifting market confidence in the SEK.
The UK’s political developments around Brexit, however, will continue to drive the GBP/SEK exchange rate into next week. Any further signs that Britain could face a no-deal Brexit next year would prove Pound-negative.