GBP/SEK Exchange Rate Rises, UK Economic Outlook Brightens Post-Election
The Pound Swedish Krona (GBP/SEK) edged higher this morning, with the pairing currently fluctuating around 12.745kr after today’s release UK inflation report beat estimates for January and rose to a six-month high of 1.8%.
Mike Hardie, the Head of Inflation at the Office for National Statistics (ONS), commented:
‘The rise in inflation is largely the result of higher prices at the pump and airfares falling by less than a year ago. In addition, gas and electricity prices were unchanged this month, but fell this time last year due to the introduction of the energy price cap.’
‘Annual house prices grew across all regions of the UK, the first time this has happened in nearly two years, with London seeing its strongest growth since October 2017.’
The GBP/SEK exchange rate has edged higher with investors becoming more optimistic that the UK’s widening economic performance could promise an improving economy post-general election.
Brexit developments continue to remain in focus, however, following comments from Prime Minister Boris Johnson’s chief Brexit negotiator, David Frost, who said that the UK would set its own rules in trade negotiations with the European Union.
GBP/SEK Exchange Rate Steady after Swedish Inflation Undershot Forecasts
The GBP/SEK remained steady today after Sweden’s inflation report for January undershot forecasts and fell from 0.4% to -1.4%.
The Swedish Krona (SEK) struggled to gain against many of its peers this week following yesterday’s weaker-than-expected Swedish unemployment rate for January, which rose from 6% to 7.5%.
Robin Ahlen, an analyst at Swedbank, noted that Sweden’s labour market data had not proved accurate in the past, adding:
‘Thus one should be cautious about over-interpreting individual numbers and rather look at the trend development and a wider palette of data.’
While the global economy hinges on China’s next move following the coronavirus epidemic, markets are remaining cautious around the Swedish currency.
Sweden’s economy is particularly oriented towards foreign trade, and with China’s epidemic threatening the global supply chain, we could see the SEK/GBP exchange rate begin to fall as markets flock to safe-haven currencies like the US Dollar and Swiss Franc instead.
GBP/SEK Outlook: Could Sterling Rise on Improving Retail Sales in January?
Sterling traders will be looking ahead to tomorrow’s release of January’s UK retail sales report. Any further signs of improvement in the British economy so early in 2020 would prove Pound-positive.
Tomorrow will also see the release of the UK CBI industrial trends survey for orders in February. However, with the report expected to sink, we could see some Sterling investors become jittery on Britain’s economic outlook going ahead.
The GBP/SEK exchange rate will also continue to be driven by developments around China’s coronavirus epidemic. Any signs of the threat diminishing in the near-term would provide a boost to the trade-correlated Swedish Krona.