Pound Advances against Swedish Krona as Weak Euro Raises GBP Demand

Mainly through virtue of a disappointing German election result, the Pound has appreciated against the Swedish Krona today.

Pound Trades Higher as Euro Flops

The Pound to Krona rise seen on September 25th has primarily come from a depreciating Euro.

The main UK news last week was Prime Minister Theresa May’s speech in Florence. The PM spoke about the ongoing Brexit talks, in the hopes of restarting stalled negotiations.

The EU reception was mixed, with top-level German and French officials expressing disappointment about the lack of hard promises in the speech.

The Pound’s rise comes despite news late last week that Moody’s has cut the UK’s credit rating to Aa2.

Additionally, the Bank of England (BoE) Financial Policy Committee (FPC) has warned that the UK may have difficulty if rampant consumer lending continues.

Swedish Military Exercises Worry SEK Traders

With little economic news out of Sweden recently, the Krona has instead been weakened by ongoing military exercises in the west of the country.

With Russian military posturing on the rise and a vast Russian military exercise taking place, Sweden has resorted to reinstating conscription as a contingency should a conflict develop.

Russia has previously started wars after placing troops along the borders of nations in what it called training ‘exercises’, leaving many uncomfortable to observe the build-up of Russian military might after the annexation of Crimea from Ukraine in 2014.

GBP/SEK Forecast: BoE Carney Speech to Create Pound Volatility?

This week, Pound Swedish Krona exchange rate movement may be caused by Thursday’s speech from Bank of England (BoE) Governor Mark Carney, along with a spread of UK confidence, growth and investment releases on Friday.

Carney remains a highly influential figure in the UK economy, having triggered Pound rallies and drops over the previous weeks.

Recently, the Governor has spoken in favour of higher UK interest rates, provided that the UK economy continues to improve. He quickly reined in these remarks, however, stating that future rate hikes could only be ‘limited’ and ‘gradual’.

If Carney gives a clear indication that the UK could indeed be on track for higher interest rates before the end of 2017 then the Pound may advance against the Krona.

Following Thursday’s speech, the Pound could be weakened by Friday’s confidence and GDP figures.

Consumer confidence is tipped to decline in September, while an annual drop in Q2 GDP growth has also been forecast. Rounding off what may be a bad morning of UK data, business investment is forecast to have stalled in the second quarter.

The week’s main Swedish announcements will consist of confidence and trade figures on Wednesday, followed by retail sales stats on Thursday.

The Swedish Krona could advance against the Pound on Wednesday, assuming that confidence figures match with forecasts.

In September, both business and consumer confidence scores are projected to rise. Unfortunately, Wednesday’s other major news, a trade balance reading for August, is expected to show a deficit expansion.

The other Swedish economic news will be retail sales figures for August. While monthly sales are forecast to slow, the Krona could still appreciate if annual sales rise as predicted.

Adam Solomon

Adam joined the team at TorFX soon after graduating from University in 2005 with a degree in Journalism. Since then Adam has advanced to become both Head of Trading and Head of Treasury. His keen interest in the currency market and knowledge of what drives exchange rates makes him perfectly positioned to produce regular market updates focused on the movements of the major currencies.

Contact Adam Solomon