GBP/SEK Exchange Rate Edges Higher as Swedish Economy Stumbles
The Pound Swedish Krona (GBP/SEK) exchange rate rose by 0.8% today, with the pairing currently trading around 12.691kr after this morning saw the Swedish unemployment rate for January jump from December’s 6% to 7.5%.
Robin Ahlen, an analyst at Swedbank, said that Sweden’s labour market remained ‘choppy’, and warned that ‘one should be cautious about over-interpreting individual numbers and rather look at the trend development and a wider palette of data’.
Meanwhile, the Swedish National Debt Office published its forecasts of Sweden’s economic development in the near-term. The statement concluded:
‘The overall picture consists of low growth both globally and in Sweden, which we have taken into account in our borrowing plan. Towards the end of next year, the situation appears somewhat brighter and the Swedish economy grows somewhat more rapidly again.’
With the Swedish economic outlook appearing increasing unclear as China’s coronavirus outbreak threatens to weaken the global economy, we should expect the GBP/SEK exchange rate to remain relatively unmoved until further clarity on Sweden’s budget is announced.
GBP/SEK Exchange Rate Rises as UK ILO Unemployment Rate Maintains Record Low
The Pound (GBP) rose against the Swedish currency following today’s publication of the UK ILO Unemployment Rate report, which confirmed consensus and held at 3.8% – its lowest since 1974.
Thomas Pugh of Capital Economics, commented:
‘Overall, the strength in the labour market in Q4 will give some comfort to the MPC [the Bank’s monetary policy committee] that it was right to keep rates on hold at 0.75% at its meeting on 31 January… Of course, this is all old news, but the most recent surveys are suggesting that employment growth will continue to pick-up in Q1, which we think will contribute to the MPC keeping rates on hold at its next meeting on 26 March as well.’
Today also saw the release of the UK average earnings figure for December, which undershot forecasts and sank and grew by 2.9% rather than the expected 3%, leaving some Sterling traders feeling jittery over the health of the British economy.
However, growing concerns over post-Brexit trade negotiations between the UK and the EU are preventing any further gains for the Pound today. This follows comments from David Frost, the UK’s Chief Brexit negotiator, who said that Britain would refuse to budge on escaping the EU’s rules.
Mr Frost added:
‘It is central to our vision that we must have the ability to set laws that suit us – to claim the right that every other non-EU country in the world has.’
GBP/SEK Outlook: Could Sterling Continue to Rise on Strengthening UK Inflation Data?
Swedish Krona (SEK) traders will be looking ahead to tomorrow’s release of Sweden’s Consumer Price Index for January. However, as the month-on-month figure is expected to fall by -1.1%, we could likely see the Swedish Krona continue to fall against its peers.
Sterling (GBP) investors will be awaiting tomorrow’s UK inflation report for January, which is expected to rise by 1.6%. As a result, we could see the GBP/SEK exchange rate continue to edge higher as Britain’s economic outlook brightens for 2020.