GBP/SEK Exchange Rate Falls, Could the Swedish Krona Fall as Global Trade Suffers?
The Pound Swedish Krona (GBP/SEK) exchange rate eased by -0.25% this morning, after Sweden’s retail sales report for December beat forecasts and rose from -0.3% to 0.5%, buoying market appetite for the Swedish currency as its economy shows signs of recovery.
Today also saw the release of the Swedish Producer Price Index for December, which rose by 1.3% year-on-year, while the month-on-month figure fell from 0.3% to -0.5%.
The Swedish Krone’s (SEK) gains, however, could be short-lived after analysts at Danske Bank forecasted a growth recession for the Swedish economy which would mirror the Euro economic crisis of 2012.
With Sweden’s weakening PPI data confirming fears of weaker inflation this year, any further indications that the Riksbank could introduce a zero interest rate policy this year would weaken the SEK/GBP exchange rate.
We could see the trade-oriented Swedish Krona (SEK) also being to struggle on heightened global economic uncertainty, with China’s coronavirus weighing on market appetite as the world’s second-largest economy struggles amidst the outbreak.
GBP/SEK Exchange Rate Sinks as BoE Rate Cut Fears Return
The Pound (GBP) eased against the Swedish Krona (SEK) as British markets are becoming increasingly jittery ahead of Thursday’s interest rate decision from the Bank of England (BoE).
Mark Gregory, EY’s Chief Economist, commented:
‘There may be some improvements in the economy, but it’s not time to pop the champagne yet… There are still significant unknowns – about the trade deal around Brexit, and the wider policy agenda of government.’
The GBP/SEK exchange rate is also subdued ahead of Friday, 31st January, when the UK is due to officially leave the European Union.
Due to the amount of uncertainty for the UK economy this week – with markets uncertain over whether the BoE will slash its interest rates and the future of the UK economy post-Brexit – the Pound to Swedish Krona exchange rate is likely to remain volatile for much of this week.
GBP/SEK Outlook: Brexit and BoE Interest Rate Decision in Focus
Swedish Krona (SEK) investors will be looking ahead to tomorrow’s release of January’s Swedish consumer confidence report. Any signs of improvement would provide further uplift for the Swedish currency as the economy continues to show signs of improving.
The GBP/SEK exchange rate will, however, continue to be driven by market speculation ahead of Thursday’s BoE interest rate decision. If there are any further signs that the central bank could cut its interest rates, this would prove Pound-negative.
Brexit will also remain in focus this week. Any signs that the UK and the EU could fail to secure a trade deal within the timeframe of the transition period would also weaken the GBP/SEK exchange rate.