Pound Sterling to Swedish Krona Exchange Rate Forecast: Trade War Jitters Could Facilitate GBP/SEK Gains

Pound to Swedish Krona Exchange Rate Advances on Trade War Fears despite Sterling Weakness

Investors had a good reason to sell the Pound (GBP) on Friday due to criticism of Theresa May’s Brexit proposals from US President Donald Trump, but the Pound Sterling to Swedish Krona (GBP/SEK) exchange rate ultimately advanced as trade war jitters hit the Swedish Krona (SEK).

Despite shedding ground against some other major rivals, GBP/SEK has climbed this week. GBP/SEK opened this week at the level of 11.60 and touched on a weekly high of 11.74 on Thursday evening.

At the time of writing on Friday, GBP/SEK was trending in the region of 11.70.

The Swedish Krona’s movement was little-inspired by the latest Swedish inflation results, but the currency has been weighed both by trade uncertainties and a perceived dovish tone from the Riksbank.

Pound (GBP) Exchange Rate Strength Limited as US President Criticises Brexit Plan

Another mixed week for the Pound (GBP), as signs of a softer Brexit being more likely and higher Bank of England (BoE) interest rate hike bets bolster Sterling, but Brexit uncertainties continue to put pressure on the currency.

On Thursday night, US President Donald Trump aired criticisms about UK Prime Minister Theresa May’s Brexit white paper, published earlier in the day.

Trump indicated that the Brexit the UK government was aiming for would likely mean the potential for a quick UK-US trade deal was off the table. As a result, investors sold the Pound.

According to Fiona Cincotta, senior market analyst from City Index:

‘The UK can’t afford to alienate either the US or the EU, its two largest foreign trade partners, and will not be able to choose an “either-or” solution. Trump’s comments come at a particularly bad time for May who is facing bigger problems as her government is in a precarious balance after the resignations of David Davis and Boris Johnson earlier this week.’

Swedish Krona (SEK) Weakened by Trade Jitters and Central Bank Caution

Signs that Sweden’s Central Bank is likely to remain as cautious and dovish as the European Central Bank (ECB) for quite some time added to global pressures and left the Swedish Krona (SEK) weaker this week.

On Thursday, Sweden’s June inflation rate figures were published and the Riksbank published its latest meeting minutes results.

Most of the inflation data met forecasts, but the yearly core figure fell short of the predicted 2.3%, only rising to 2.2%. It indicated that underlying price pressures still saw risks and supported the bank’s cautious tone.

The Riksbank’s latest meeting minutes report was relatively dovish too, leaving investors betting that Sweden was unlikely to see higher interest rates until mid-2019 at the earliest.

The Swedish Krona has been weighed by global trade nerves too, as the US ramps up the rhetoric and escalates its tariffs on Chinese goods.

Pound to Swedish Krona (GBP/SEK) Forecast: UK Inflation and Bank of England (BoE) Bets in Focus

While investors are anxious about what impact US President Trump’s comments could have on the relatively soft Brexit plan, if UK Prime Minister Theresa May’s leadership remains sturdy the Pound to Swedish Krona (GBP/SEK) could see further gains.

Many analysts predict that the Brexit white paper could actually reassure markets enough to make Pound investors more bullish in the coming months.

Bank of England (BoE) interest rate hike bets could rise next week too, depending on the results of Britain’s upcoming wage prices and inflation rate reports.

The UK jobs market report from May will come in on Tuesday, followed by inflation on Wednesday. If these beat forecasts, GBP/SEK is likely to become more appealing as BoE interest rate hike bets rise.

Next week will be quieter in terms of Swedish data, but amid a lack of support the currency is unlikely to climb much unless investors opt to buy it from its cheap levels.

As the Krona continues to feel pressure from US trade uncertainties, US-China trade war developments could of course also influence the Pound to Swedish Krona (GBP/SEK) exchange rate.

Josh Ferry Woodard

After leaving university in 2011 Josh briefly worked as a currency analyst in the South West of Cornwall. Josh continued monitoring the currency markets and publishing exchange rate analysis after moving to London in 2012, with a particular focus on the impact of economic and political stimuli on forex. Josh was a regular contributor to The Telegraph’s weekly currency feature for several years.

Contact Josh Ferry Woodard