Pound Sterling Swedish Krona (GBP/SEK) Exchange Rate Muted as UK Services ‘Leapt into Action’
The Pound Sterling Swedish Krona (GBP/SEK) exchange rate remained muted on Wednesday, leaving the pairing trading at around 12.4945Kr.
UK service sector data revealed a rebound in new work left the PMI at its highest level since September 2018.
Sterling remained flat, edging up as Markit showed that business activity rose for the first time in five months.
The services sector PMI jumped to 53.9 in January as headwinds from delayed decision making lifted. This was thanks to the UK general election in December.
Commenting on this morning’s data, Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply said:
‘The UK service sector leapt into action in the New Year with a welcome return to stronger business activity and an optimism not seen for almost five years. New work flowed in at a surprisingly sharp rate as businesses started to invest and previously uncertain consumers parted with their cash. Orders held back by political uncertainty were uncorked at the fastest rate for around a year and a half.
‘All in all a positive start last month, and if political stability is maintained throughout the year with political promises becoming reality, then 2020 could become a stellar year for service companies.’
Manufacturing and Services PMIs Support Swedish Krona (SEK)
Sweden’s services PMI revealed that activity within the sector expanded at a faster rate than forecast.
January’s figure jumped from an upwardly adjusted 49.1 to 52.5, providing support for the Krona.
This was the first expansion in the services sector since August 2019 thanks to an increase in both new orders and employment.
This upbeat services data followed Monday’s better than expected rise in the Swedish manufacturing PMI. This buoyed SEK after the manufacturing sector reported its first month of growth since August 2019.
However, disappointing Swedish industrial production and new orders data weighed on the currency.
December’s production levels dropped by an annual rate of -2.4% while monthly production slumped by -1.6%.
Added to this, new orders plummeted by -4.7% at the end of 2019 while November’s orders were downwardly revised to a slight rise of 0.4%.
Pound Swedish Krona Outlook: Will Household Spending Buoy SEK?
Looking ahead, the Pound (GBP) could slump against the Swedish Krona (SEK) if tensions between the UK and EU increase.
If tensions heighten and traders worry the chance of the UK reaching a deal with the EU at the end of the transitionary period decreases, Sterling will fall.
Meanwhile, on Friday the Krona could edge higher following December’s household consumption data is released.
If household consumption rises higher than expected, the Pound Swedish Krona (GBP/SEK) exchange rate is likely to slide.