GBP/SEK Exchange Rate Edges Higher as Sweden’s Economic Outlook Dims
The Pound to Swedish Krona (GBP/SEK) exchange rate edged higher today as the Swedish Government appeared to take a softer approach towards the coronavirus, leaving investors concerned as it bucks the trend throughout the rest of Europe. The pairing is currently trading around 12.02kr.
Mikael Rostila, a researcher at the Centre for Health Equity Studies (CHESS) at Stockholm University, commented:
‘I’d say Swedes have a high degree of faith in science and evidence and right now we’re facing a public health crisis where epidemiological insights are crucial. So, the experts at the Public Health Agency, with Sweden’s state epidemiologist Anders Tegnell at the helm, have taken center stage at this acute stage. But in the longer term, the economic impact may well become the more overriding concern and then we’re likely to turn to other experts.’
Today also saw Sweden’s Producer Price Index for February sink to a lower-than-expected -0.6% in February. As a result, SEK investors are preparing for an even worse report for March, when the coronavirus took hold of the world’s economies.
With Sweden’s economy being heavily export-oriented, uncertainty around the global economic situation the Swedish Krona (SEK) is set to struggle throughout the course of this week.
GBP/SEK Exchange Rate Rises, UK Lockdown Boosts Hopes of Curbing Covid-19
The Pound (GBP) edged higher against the Swedish currency today as investors become increasingly optimistic that Prime Minister Boris Johnson’s announcement of a nationwide lockdown may curb the number of the UK’s coronavirus cases.
However, after today’s spike of UK coronavirus deaths at 89 – taking the total up to 424 – the Pound’s gains look uncertain as Britain’s outlook continues to remain uncertain.
Sterling rose following a joint letter from Chancellor Rishi Sunak and the newly appointed Bank of England (BoE) Governor Andrew Bailey urging Chief Executives of major banks to continue to support viable businesses throughout the coronavirus crisis.
The joint letter stated:
‘This will require a willingness to maintain and extend lending despite the uncertain economic conditions. We must ensure that firms whose business models were viable before this crisis remain viable once it is over.’
The Pound (GBP) also benefited from renewed risk appetite as traders continue to digest the US Federal Reserve’s fiscal stimulus bill, which has now been granted by the US Congress.
Today also saw the UK inflation gauge for February dip slightly from 1.8% to 1.7%, while core inflation rose to a better-than-expected 1.7%.
Michael Hewson, a chief analyst at CMC Markets, commented on the report:
‘This isn’t likely to move the needle that much when it comes down to how the UK economy is right now. However, today’s CBI retail sales numbers for March could well signal evidence of a sharp slowdown this month.’
GBP/SEK Outlook: Bank of England’s Monetary Policy Statement in Focus
Pound (GBP) investors will be awaiting tomorrow’s interest rate decision from the Bank of England (BoE). However, with the BoE recently slashing its interest rates to record-lows, analysts expect the bank to hold its rates for the foreseeable future.
If the BoE announces any further fiscal stimulus measures, such as buying government bonds, we could see the Pound improve as hopes of an economic recovery pick up.
The Swedish Krona (SEK) could further sink tomorrow if March’s Swedish consumer confidence shrinks.