GBP/SEK Exchange Rate Falls as No-Deal Brexit Fears Increase
The Pound Swedish Krona (GBP/SEK) exchange rate fell to 11.850kr today amidst reports that Prime Minister Boris Johnson is asking the Queen to move her mid-September speech, effectively suspending Parliament.
Moving the speech to October will automatically reset the current Parliamentary session and any legislation due to be passed will instead be cancelled, scuppering cross-party attempts to block a no-deal scenario using legislation. Consequently expectations for a no-deal outcome are now higher and confidence in Sterling has fallen.
In a letter to Conservative MPs, Mr Johnson stated:
‘Parliament will have the opportunity to debate the government’s overall programme, and approach to Brexit, in the run-up to EU Council, and then vote on this on 21 and 22 October, once we know the outcome of the council… Should I succeed in agreeing a deal with the EU, parliament will then have the opportunity to pass the bill required for ratification of the deal ahead of 31 October.’
Pound traders remain cautious as critics accuse the Conservative Government of being undemocratic and even unconstitutional.
It would be a constitutional outrage if Parliament were prevented from holding the government to account at a time of national crisis. Profoundly undemocratic.
— Philip Hammond (@PhilipHammondUK) August 28, 2019
Beyond political developments, July’s BRC Shop Price Index for July showed their fastest decline in over a year, falling from -0.1% to -0.4%.
Helen Dickinson, the Chief Executive at BRC, said:
‘Weak consumer spending and stiff competition have kept prices down in the UK, however a disruptive no-deal Brexit, which would raise the cost of imported goods, could reverse this trend.’
SEK/GBP Exchange Rate Rises on July Swedish Retail Sales Improvement
The Swedish Krona (SEK) rose against the Brexit-beleaguered Pound after July’s Swedish retail sales beat forecasts and rose by 0.4%. The year-on-year figure also improved, rising from 3.4% to 4.3%.
However, Sweden’s economy, which relies heavily on foreign trade, has been facing increasing economic volatility amid heightened geopolitical tensions.
Meanwhile, US-China developments remain in focus for Swedish currency traders.
After the US scheduled a 15% increase on US$300 billion of Chinese imports, tensions between the two superpowers escalated. President Donald Trump then exacerbated the situation when he described a phone call which China’s Foreign Ministry spokesman, Geng Shuang, denies took place.
Shuang added:
‘Regretfully the US has announced its decision to add new tariffs on Chinese products. Such maximum pressure will hurt both sides and is not constructive at all.’
GBP/SEK Outlook: Brexit Developments to Remain in Focus
The Swedish Krona (SEK) could begin to ease against the Pound if tomorrow’s Swedish consumer confidence figure confirms forecasts by falling from 97.7 to 95.1 in August. The Swedish business confidence figure for the same month is also expected to ease.
Sterling investors will be looking ahead to Friday’s publication of August’s GfK consumer configure figure, which is expected to reduce from -11 to -12.
The GBP/SEK exchange rate looks set to remain volatile for the rest of the week with a no-deal Brexit looking increasingly more likely.