Pound Sterling Swedish Krona (GBP/SEK) Exchange Rate Boosted by Upbeat US Jobs Data
UPDATE: The Pound Sterling Swedish Krona (GBP/SEK) exchange rate rebounded by 0.2% on Thursday afternoon. This left the pairing trading at around 11.6264Kr.
The Pound was driven higher by a weaker US Dollar this afternoon as investors looked at the likelihood of the UK reaching a post-Brexit trade deal.
This month is crucial for Sterling as it should be clear whether or not the UK will walk away from the European Union with a deal.
However, gains were limited after a EU-UK meeting between chief negotiators scheduled for tomorrow was cancelled.
Commenting on this, Stephen Gallo, European head of FX strategy at BMO said:
‘The second to last week and the last week of July are going to be the extreme Brexit crunch point.
‘If there’s not movement by the week of 20th or the week of 27th, that may be the second wave of selling in Sterling.’
Added to this, the riskier Pound was provided with further support after the latest US jobs data boosted risk appetite.
Nonfarm payrolls data revealed the United States added a record 4.8 million jobs to its economy in June.
Pound Sterling Swedish Krona (GBP/SEK) Exchange Rate Slides Following Riksbank Rate Decision
The Pound Sterling Swedish Krona (GBP/SEK) exchange rate edged -0.2% lower on Thursday morning. This left the pairing trading at around 11.5769Kr.
The Krona continued to rise today after Wednesday saw Sweden’s central bank leave its key rate at 0% as expected.
The Riksbank also boosted the size of its asset purchases, which included corporate bonds for the first time. This is to help soften the blow to the economy thanks to the coronavirus pandemic.
Sweden seems to be through the worst of the outbreak and has come off more lightly compared to other countries.
The bank expects the economy to shrink by around -4.5% this year. However, the country’s government expects this to be worse, and forecasts a -6% slump. Although, this is significantly better than the predictions of double-digit falls for the rest of Europe.
Despite this, Sweden’s central bank said it would need to implement further measures to support the country’s recovery.
In a statement, the bank said:
‘To avoid an unnecessarily prolonged and deep decline in the economy and inflation, monetary policy needs to continue to contribute to the smooth functioning of credit supply in the economy and to keeping interest rates low.’
The bank has also not cut its benchmark rate and noted this could not help much in boosting demand. However, it would not exclude that if it was needed.
According to Swedbank economist, Knut Hallberg:
‘They are very hesitant to cut rates and we don’t think they will in this period. I think central banks see that in this crisis we need a strong banking sector and negative interest rates aren’t good for banks.’
Pound (GBP) Falls despite Hopes for Coronavirus Breakthrough
Sterling edged lower against the Swedish Krona today as traders continued to worry about growing coronavirus cases.
However, sentiment received a boost after upbeat European data and hopes for a coronavirus breakthrough.
A coronavirus vaccine being developed by German biotech firm BioNTech and US giant, Pfizer have shown potential during early-stage human trials.
Traders are also focused on the latest US jobless data and non-farm payrolls. According to Commerzbank FX strategist, Thu Lan Nguyen:
‘A renewed significant fall in the unemployment rate would make the market feel confident about a recovery.
‘In that case we would see risk-on, which should theoretically be negative for the US currency since the US Dollar has been in demand as a safe haven during the crisis.’
Although, Sterling sentiment was slightly boosted, the currency continued to struggle against the Krona.
Analysts now expect GBP to be around 4% stronger in a year’s time in the UK and European Union can secure a trade deal.
However, this did little to support GBP against the Swedish Krona which has strengthened since the country’s central bank announced a quantitative easing programme.
Pound Swedish Krona Outlook: Consumer Confidence and Services PMI in Focus
Looking ahead to Friday, the Pound (GBP) could edge higher against the Swedish Krona (SEK) following the release of confidence data.
If GfK shows Britain’s consumer confidence has improved more than expected, it will boost Sterling.
However, the Krona could claw back some of these losses following the release of Sweden’s services PMI.
If June’s services PMI rises closer to the no-change 50 mark than expected, showing the country’s services sector is returning to growth, SEK will rise. This will leave the Pound Swedish Krona (GBP/SEK) exchange rate largely flat.