Swedish Riksbank Keeps Interest Rates on Hold – Pound Swedish Krona (GBP/SEK) Exchange Rate Capitalises
The Pound to Swedish Krona (GBP/SEK) exchange rate climbed on Thursday, supported by the recent upbeat UK government borrowing figures and fresh news that Sweden’s central bank has, once again, kept its benchmark interest rate at -0.5%.
Sweden’s Riksbank made the decision to push back hawkish policy plans based on their continued struggle with low levels of inflation.
The bank has also asserted that they do not see a rate hike until ‘towards the end of the year’.
This was a definite step back from the previous assessment that a rate hike could occur in ‘the second half of this year’.
The bank’s statement read:
‘It has taken a long time to bring up inflation and inflation expectations, and there is considerable uncertainty over the development of inflation. Monetary policy thus needs to proceed cautiously. If the conditions for inflation were to change, the executive Board is prepared to adjust monetary policy.’
The Krona promptly weakened in response, extending its poor performance of Q1 2018 as concerns continued to dominate regarding Sweden’s deflating housing market and weak consumer price inflation.
Pound (GBP) Exchange Rates Bearish Ahead of ECB Rate Decision
Sterling might have maintained its lead against the Swedish Krona (GBP/SEK) on Thursday morning, but market concerns regarding the imminent European Central Bank (ECB) rate decision have kept a lid on its climb.
Whilst the ECB is not expected to raise interest rates or make any notable policy changes at this meeting, bank policymakers are expected to discuss efforts to keep the value of the Euro down.
This is largely due to concerns that the strength of the single currency is making bloc exports less attractive and continually preventing inflation from reaching target levels.
Beyond this, the accompanying speech from ECB President Mario Draghi will be carefully assessed for any indication of hawkish or dovish sentiment.
Any suggestion that the bank could be extending its bond-buying measures beyond 2018 could also have large implications for the Euro and the Pound.
Indeed, if the bank is deemed dovish, then the GBP/SEK exchange rate could capitalise and extend its lead.
Pound Swedish Krona (GBP/SEK) Exchange Rate Forecast: UK GDP and Carney Speech in the Spotlight
The Pound Swedish Krona (GBP/SEK) exchange rate could encounter greater volatility tomorrow as markets respond to the UK’s latest gross domestic product readings and a speech from Bank of England (BoE) Governor Mark Carney.
Analysts currently expect Q1 2018 GDP to rise from 1.4% to 1.5% year-on-year, whilst the quarterly reading is forecast to hold at 0.4%.
Investors are slightly anxious that the recent poor weather might have weighed on this reading, however, particularly given the notable impact it had on the UK’s services sector.
Mr Carney’s speech could also be notable, with any indication that the central bank is indeed preparing for a rate hike in May liable to push GBP/SEK even higher.