Pound to Swedish Krona (GBP/SEK) Exchange Rate Gains Limited despite Poor Swedish Data
Thursday saw the publication of Sweden’s January unemployment report but the results ultimately had little effect on the Pound to Swedish Krona (GBP/SEK) exchange rate.
GBP/SEK movement has been limited this week so far. The pair opened the week at the interbank level of SEK11.19 and has since then only slipped to around SEK11.15. The GBP/SEK interbank level briefly hit a weekly low of SEK11.10 on Wednesday.
Sweden’s January unemployment rate had little impact on Krona (SEK) movement. The unemployment rate worsened from 6% to 7%, as analysts had forecast.
Sweden’s Q4 industrial inventories report also had little effect on the Krona. The figure lightened from SEK-3.5bn to SEK-0.7bn quarter-on-quarter.
Pound (GBP) Exchange Rates Edge Higher on Hopes of UK Government Stability
Concerns about the stability of Britain’s government and the position of UK Prime Minister Theresa May have caused persistent concern that the Brexit process may not go as smoothly as hoped.
However, analysts are gradually becoming more confident that the UK government is gaining in stability and that May is less at risk of having her leadership position undermined.
Thursday also saw reports that the EU had removed a so-called ‘punishment clause’ from its UK-EU transition period agreement.
The agreement previously indicated that if the UK broke EU rules during the transition period it could lose access to parts of the EU single market.
According to reports, the latest version of the agreement instead references the EU’s standard infringement processes.
Swedish Krona (SEK) Benefits from Higher Riksbank Interest Rate Hike Bets
Sweden’s central bank, the Riksbank, held its February policy decision meeting on Wednesday morning and left interest rates near their record lows of -0.5%, as investors had expected.
However, demand for the Swedish Krona was slightly stronger following Wednesday’s meeting, as one of the bank’s policy members voted to hike Swedish interest rates for the first time.
Analysts have speculated in recent months that the Riksbank could begin to tighten monetary policy within the next year or so.
Riksbank Deputy Governor Henry Ohlsson noted ‘strong economic growth in Sweden and abroad’ as his reason to vote for a rate hike, despite the nation’s weak inflation.
Commenting on Ohlsson’s decision, ING bank stated:
‘Ohlsson’s vote for a hike today means he will be pushing for a hike from now on. Fellow hawk Floden may join him in April or July. But the balance of the committee sits with Governor Ingves and we expect that his more cautious approach will win out in the end, with the Riksbank postponing the first hike into Q4 and possibly even early 2019.’
Pound to Swedish Krona (GBP/SEK) Exchange Rate Likely to be influenced by Upcoming UK Data
Several noteworthy UK ecostats will be published over the coming week, which could influence the Pound to Swedish Krona (GBP/SEK) exchange rate.
For now, GBP/SEK investors will focus on Friday’s UK retail sales results. UK retail sales are forecast to have risen from -1.5% to 0.5% month-on-month and from 1.4% to 2.6% year-on-year.
If UK retail stats beat expectations it could boost market hopes that UK consumer activity is remaining resilient amid the Brexit process.
However, Brexit uncertainties could continue to weigh on Sterling and limit its gains.