GBP/SEK Exchange Rate Rises on Mixed-Signals around Riksbank Rate Hike
The Pound Swedish Krona (GBP/SEK) exchange rate improved today, with the pairing currently trading around 12.508kr after Sweden’s inflation figure for October came in line with forecasts at 1.6%.
Olle Holmgre, an Economist at SEB, commented:
‘This deviation [from the Riksbank’s forecast] is not big enough for the Riksbank to back down from its planned rate hike in December. It will probably take a lot for the Riksbank to change its mind.’
However, Sweden’s inflation report failed to improve the SEK/GBP exchange rate, with Swedish Krona traders still reeling from last week’s dovish Riksbank minutes in which several policymakers opposed the planned December rate hike from -0.25% to 0%.
With the Swedish economy relying so heavily on foreign trade, any flare-ups between the US and the European Union over US President Donald Trump’s plans to hike tariffs on European automobiles and vehicle parts could further weaken the case for a Riksbank rate hike.
Mr Trump recently criticised the EU’s approach to trade, saying:
‘Many countries charge us extraordinarily high tariffs or create impossible trade barriers. I’ll be honest [the] European Union [is] very difficult. The barriers they have up are terrible, in many ways worse than China.’
GBP/SEK Exchange Rate Improves despite October’s Three-Year Low UK Inflation Figure
The Pound (GBP) improved against the unsteady Swedish Krona (SEK) today, despite the UK inflation figure for October falling below consensus to a three-year low at 1.5%.
Howard Archer, an Economist at EY Item Club, was downbeat in his assessment, saying:
‘Inflation dipping more than expected to 1.5% in October will… likely fan expectations that the Bank of England will cut interest rates before too long if the economy fails to pick up from its current struggles.’
Today also saw the UK retail sector struggle, with October’s Retail Price Index falling below consensus to -0.2% due to ongoing Brexit uncertainty.
However, the GBP/SEK exchange rate remained unmoved, with British political remaining firmly in focus ahead of the 12th December general election.
GBP/SEK Outlook: Could the Krona Rise on Improving Swedish Unemployment Data?
We could see the Swedish Krona (SEK) rise tomorrow if September’s Swedish unemployment rate figure confirms consensus and improves from 7.1% to 6.7%.
Sterling investors will be awaiting tomorrow’s publication of the UK retail sales figure for October, which is expected to rise from 0% to 0.2% on the month.
The GBP/SEK exchange rate will be driven by the UK’s ongoing political developments this week, with any signs of the Conservative Party further consolidating their lead in the polls buoying the Pound on a restored sense of political stability.