Pound Sterling Swedish Krona (GBP/SEK) Exchange Rate Muted as Investors Flock to Safe-Haven Currencies
The Pound Sterling Swedish Krona (GBP/SEK) exchange rate remained flat, leaving the pairing trading at around 12.4883Kr.
The pairing was left flat as investors fled to safe-haven currencies as the threat of coronavirus in China increased.
This provided the safe-haven Krona with an upswing of support, although the pairing was left flat as GBP was supported by optimism the central bank will avoid cutting rates in January.
The number of reported deaths from the virus rose to 17 while the number of infections jumped to 600, pushing China to lock down Wuhan where the outbreak is believed to have originated.
Added to this, the World Health Organization (WHO) is to decide later today whether or not to declare the situation a global health emergency.
While markets rebounded after worries intensified at the start of the week, fears have hit again and Pepperstone’s Head of Research, Chris Weston noted:
‘Yesterday we thought it was one sell-off and done […] today it’s a bit of a slap back to reality.’
Swedish Krona (SEK) Flat as Unemployment Falls
On Thursday, data showed that Sweden’s unemployment rate fell back from 6.8% to 6% in December.
This was better than expected, which likely supported the Swedish Krona.
Statistics Sweden revealed that the number of people unemployed increased by 1,000 while the number of those in employment jumped by 32,000 during the final month of 2019.
Compared to December 2018, the employment rate increased to 68% from 67.9% which likely provided some support for SEK.
Sterling (GBP) Holds onto Wednesday’s Gains
Mid-week saw the Pound strengthen as the chance of a Bank of England (BoE) interest rate cut continued to decrease.
On Monday, markets believed the chances of a cut were around 70%, while on Wednesday this dropped back to 50%.
Tuesday’s labour market statistics supported the case for the central bank to leave rates unchanged, as job growth in the UK rose close to a one-year high.
Many believe the BoE will avoid a rate cut during next week’s meeting, and Kallum Pickering, Berenberg’s senior economist noted:
‘I struggle to make a strong case for a January rate cut. Much of the data, which is weak, is pre-election, so what will matter more to the Bank of England is the PMI data on Friday.’
Sterling was able to hold onto its recent gains, although the currency was left flat against the Krona at the start of today’s session.
Pound Swedish Krona Outlook: UK PMI Data in Focus
Looking ahead to Friday, the Pound (GBP) could rise against the Swedish Krona (SEK) following the release of UK PMI data.
Investors are looking to this week’s PMI data as this could determine whether or not the Bank of England (BoE) is likely to cut rates during its January meeting.
If the flash PMI data is better than expected in January, it could provide further evidence for BoE policymakers to hold back on cutting rates.
If the chances of a rate cut continue to decline, it will buoy GBP and cause the Pound Swedish Krona (GBP/SEK) exchange rate to rise.