Pound Swedish Krona (GBP/SEK) Exchange Rate Dips on Riksbank Hopes and Surprise UK Inflation Rise

Swedish Krona to Pound Exchange Rate Rises on Hopes for Riksbank Rate Hike

The Swedish Krona (SEK) remains buoyant against the Pound (GBP) this week, trading near an inter-bank exchange rate one-month high of £0.08.

This appreciation comes in part from Monday’s Riksbank minutes, which suggested that there could be an interest rate hike in December.

While a late-2018 interest rate hike was not explicitly telegraphed by the minutes, it was revealed that Riksbank Deputy Governor Per Jansson said:

‘My sights are now firmly set on it being possible to implement the first rate rise in either December or February.’

Cautious Reception to UK Price Growth Adds to GBP/SEK Exchange Rate Losses

Meanwhile, the Pound’s (GBP) slip against the Swedish Krona (SEK) today also follows the news that UK inflation unexpectedly rose during August.

The surprise rise in UK price growth hasn’t caused universal gains for Pound Sterling, with the UK currency slipping against the Krona to an interbank exchange rate of SEK11.70.

The Pound’s losses on this news can be attributed to concerns that UK households will have a tougher time due to higher inflation.

Summarising the problems caused for consumers by rising prices, Emma-Lou Montgomery of Fidelity International said:

‘Today’s inflation figures are a body blow to UK households after the latest CPI figures showed that price rises jumped 2.7% in August.

‘The latest figures mean that wage growth including bonuses (2.6%) has once again fallen behind inflation and means that we are all getting progressively poorer again.’

Perhaps worse still, core inflation remains at 2.1%. Although UK households will be pressured by higher prices, the Bank of England (BoE) won’t necessarily make a near-term interest rate hike on this news, which will be a relief to mortgage payers.

Pound Sterling to Swedish Krona Outlook: Will Slower UK Retail Sales Damage GBP/SEK Exchange Rate?

The Pound (GBP) risks falling further against the Swedish Krona (SEK) before the end of the week, as UK retail sales data comes out tomorrow morning.

These stats for August are expected to show a slower pace of activity for the monthly and annual readings, which could drain confidence among GBP traders.

Despite the potential for early GBP/SEK exchange rate losses, however, Pound Sterling could recover if the later EU summit brings better news.

EU leaders will be discussing current Brexit progress and might boost the Pound if they offer an agreeable compromise that promises to accelerate the pace of Brexit talks.

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