Pound Swedish Krona (GBP/SEK) Exchange Rate Rises As UK Unemployment Remains at Four-Decade Low
The Pound Swedish Krona (GBP/SEK) exchange rate rose by close to 1.5% this morning, trading at an inter-bank rate of 12.1382kr.
Data released this morning showed that the UK labour market remained buoyed ahead of Brexit as unemployment held steady at 4%, with a record high 32.6 million people in work.
The Pound received further support in the form of UK average earnings (excluding bonuses) remaining steady at 3.4% from November’s previously revised figure.
However, average earnings including bonuses held at 3.4% in December despite the prediction this would rise to 3.5%.
Andrew Wishart, UK Economist at Capital Economics noted:
‘While reassuring, the large rise in employment in the fourth quarter probably marks a peak in employment growth given the deterioration in surveys of hiring in January. And pay growth plateaued.’
However, Brexit anxieties increased following the announcement that Japanese carmaker Honda has planned to close its factory in the UK.
This could see 7,000 jobs threatened, double the number that was previously expected, although this did little to weigh down the GBP/SEK exchange rate.
Earlier: Swedish Krona (SEK) Slides Most in Eight Months
This morning, Statistics Sweden released the national Consumer Price Index, with consumer price pressures easing more than forecast in January.
This saw the Swedish Krona experience its most significant slump for eight months, sparking concerns over whether the central bank will have the ability to raise borrowing costs.
The currency also suffered its worst January since 1993 following a slump in consumer confidence and poor retail sales.
Month-on-month inflation in Sweden came in at -1%, a figure of -0.7% had been expected.
On a year-on-year basis, inflation came in at 1.9% rather than the 2.2% expected.
Kiran Sakaria, a Strategist at Handelsbanken AB in Stockholm noted:
‘The last couple of months have shown that investors are somewhat reluctant to buy SEK, and this figure doesn’t change the negative sentiment.
‘We expect inflation to pick up somewhat during the first half of 2019, and if we’re right that will lead to the markets pricing a higher probability of a rate hike this autumn and we will probably see a gradual strengthening of the Krona.’
GBP/SEK Outlook: Will Brexit Anxieties Weigh on Sterling?
In the absence of notable economic data releases from the UK or Sweden, it is likely Brexit will remain a main catalyst for movement in the pairing as the week continues.
Tomorrow, UK Prime Minister Theresa May is due to meet President of the European Commission, Jean-Claude Juncker.
It seems likely the pairing could slip, as the main talking point continues to be a time limit to the Irish backstop, which the European Union have consistently denied was possible.
Stephen Barclay, UK Brexit Secretary, is also heading back to Brussels for further talks with EU Brexit negotiator, Michel Barnier.