Hints over Imminent Conclusion to Brexit Talks Push GBP/SEK Exchange Rate Higher
Pound Sterling (GBP) has firmed against the Swedish Krona (SEK) today, thanks to high hopes for a rapid resolution to Brexit talks.
EU leaders including Irish Prime Minister Leo Varadkar have backed concluding Brexit negotiations in the next few weeks – for Mr Varadkar’s part, the Irish PM has said:
‘I’m very keen to see an agreement concluded by November, if at all possible.’
Whether talks will actually be wrapped up before December remains to be seen, but the hope that such a conclusion could be imminent has still raised GBP trader confidence today.
Swedish Krona to Pound (SEK/GBP) Exchange Rate Losses Seen on Slower Pace of Orders Growth
On the other side of the pairing, the Swedish Krona (SEK) has dipped against the Pound (GBP) today on news of slowing industrial orders growth.
Industrial production stats for August revealed above-forecast growth for the monthly and annual figures, but this increased output hasn’t been met with a similar jump in orders.
August’s new orders reading has shifted from 8.4% growth in August 2017 to 2% in August 2018, which suggests a considerable slowdown in demand for industrial products.
Pound to Krona Exchange Rate Forecast: Will GBP/SEK Drop on UK GDP Slowdown?
The Pound (GBP) progressively rose against the Swedish Krona (SEK) in the first week of October, but risks falling back and making losses when UK GDP data is released next Wednesday.
This reading, covering economic activity in August, was originally expected to rise from 0.3% growth to 0.4%.
More recently, however, forecasts have come in for a potential decline to 0.2% growth during the year.
Given current concerns about the UK’s economic performance during the Brexit period, either outcome could trigger significant GBP/SEK exchange rate volatility.
In the best case scenario for Pound traders, the data will reveal above-forecast GDP growth during August which could spark GBP/SEK exchange rate gains.
For Swedish Krona traders, the next major data release will be inflation rate figures out on Thursday.
These readings for September are expected to show higher inflation for both year-on-year readings, alongside an improvement in month-on-month price growth.
A faster pace of inflation will increase the likelihood of an interest rate hike from Riksbank, Sweden’s central bank.
Riksbank policymakers have kept interest rates negative since 2016, so more pressure to raise rates could cause SEK/GBP exchange rate gains.