GBP/SEK Exchange Rate Rises as Swedish Inflation Dips in February
The Pound Swedish Krona (GBP/SEK) exchange rate rose by 0.3% today after February’s Sweden’s inflation report failed to impress after it fell below forecasts to 0.5%, while the year-on-year figure eased from 1.3% to 1%. This left the pairing fluctuating around 12.268kr.
With Sweden’s economy being an open economy, this has left it vulnerable to a hit from the global coronavirus pandemic. Consequently, market appetite for the Swedish Krona (SEK) remained under pressure this week.
Swedish inflation and wage expectations declined. Bad news for the Riksbank even though it was somewhat expected. The risk now is that inflation expectations may fall further as the corona-virus weigh on the economic development. pic.twitter.com/a99DlgCdmc
— Swedbank Makroanalys (@SwedbankMakro) March 11, 2020
However, SEK has benefited from news that the Swedish Central Bank would be unlikely to copy the US Federal Reserve and Bank of Canada in slashing its interest rates to prevent the fallout of Covid-19.
Riksbank Governor Stefan Ingves commented:
‘The Board’s judgement is that the Riksbank’s balance sheet should not, if nothing else, decrease in the coming year.’
Pound (GBP) Exchange Rate Rises on Spring Budget Boost
The Pound (GBP) rose against the Swedish Krona (SEK) in spite of apprehension ahead of Prime Minister Boris Johnson’s emergency Cobra committee meeting to discuss the UK’s response to the coronavirus outbreak.
Sterling investors are becoming jittery, however, as the Government is expected to escalate its response by entering a ‘delay’ phase to stem the Covid-19’s outbreak.
However, the GBP/SEK exchange rate could lose some of its gains today if the Government switches to a ‘delay’ phase, as this could weaken the UK economy going forward.
Yesterday’s release of the Spring Budget has provided the Pound with some upward momentum. The newly-appointed Chancellor Rishi Sunak’s budget outline offered a lifeline for the British economy.
Mr Sunak commented:
‘As we deal with Covid-19, this is a Budget that provides security today. But it is also a plan for prosperity tomorrow. It is a Budget that delivers on our promises to the British people. It is a Budget of a government that gets things done.’
Today saw the release of February’s RICS Housing Price Balance report, which beat forecasts and rose from 18% to 29%. This provided a boost for Pound as the UK’s economic outlook shows improvement.
GBP/SEK Outlook: BoE Minutes in Focus
Swedish Krona (SEK) investors are looking ahead to tomorrow’s release of February’s Swedish unemployment rate report. However, as this expected to dip we could see the SEK/GBP exchange rate fall.
Sterling traders will be awaiting tomorrow’s Bank of England (BoE) minutes. If these are downbeat in their assessment the British economy for 2020, we could see the Pound begin to lose its gains against the Swedish currency.