GBP/SEK Exchange Rate Edges Higher as Sweden Maintains ‘Soft’ Approach on Covid-19
The Pound to Swedish Krona (GBP/SEK) edged higher today, with the pairing currently trading around 12.20kr after yesterday saw Sweden’s consumer confidence for March drop from 98.5 to 89.6. The report represented the weakest it has seen since December 2012.
Today saw Sweden’s retail sales in February pick up by a better-than-expected 0.2%. However, with retail sales expected to deteriorate in March due to the coronavirus’s hold on the global economy, we could see the Swedish Krona’s gains compromised in the near future.
The Swedish Krona (SEK) also suffers from rising concern over the Swedish Government’s relatively soft approach to its domestic coronavirus developments, refusing – like many other countries throughout Europe – to put the nation under lockdown.
Fredrik Elgh, a Swedish virology professor, said that he was ‘deeply concerned’, saying that Sweden’s approach was a ‘huge experiment’ which could go ‘crazily’ wrong.
GBP/SEK Exchange Rate Rises as Sterling Acts as Risk-Sensitive Currencies
The Pound (GBP) edged higher today as it continues to react to market volatility like a risk-sensitive currency. With investor sentiment improving following the US Federal Reserve’s massive stimulus package, Sterling has continued to rise against many of its peers.
Yesterday’s decision by the Bank of England (BoE) to leave interest rates untouched at all-time record lows of 0.1% has also continued to boost the GBP/SEK exchange rate today.
The Bank of England was, however, downbeat in its statement:
‘Given the severity of that disruption, there is a risk of longer-term damage to the economy, especially if there are business failures on a large scale or significant increases in unemployment.’
‘The scale and duration of the shock to economic activity, while highly uncertain, will be large and sharp but should ultimately prove temporary, particularly if job losses and business failures can be minimised.’
However, with the UK’s economy set for a recession due to the ongoing lockdown of non-essential businesses, the Pound’s gains are likely to be short-lived.
Additionally, as oil prices continue to plummet and global economic activity slows, we could see GBP react negatively along with other increasingly risk-sensitive currencies.
GBP/SEK Forecast: Could Sterling Rise on Easing UK Coronavirus Cases?
Pound (GBP) investors are looking ahead to Monday’s release of the UK GfK consumer confidence report for March. If this confirms consensus and shrinks to -14 we will likely see the GBP/SEK shed some of its gains.
The Swedish Krona (SEK) will remain sensitive to domestic developments relating to the coronavirus. However, if Sweden’s government continues to take its unique path towards containment measures, we could see investors flock from the Swedish currency as uncertainty rises.
The GBP/SEK exchange rate will continue to be driven by coronavirus developments, both domestic and global. If cases show any signs of diminishing either inside the UK or outside, we could see Sterling benefit as an ending to the pandemic comes into sight.