GBP/SEK Exchange Rate Sinks as UK Unemployment Woes Weighs on Sterling
The Pound to Swedish Krona (GBP/SEK) exchange rate dipped today, with the pairing currently trading around 12.446kr.
Sterling fell after today’s release of February’s UK ILO Unemployment Rate report, which rose by 4%. Nevertheless, some Pound investors were unmoved because the data reflects the period before the coronavirus was detected in Britain.
Instead, GBP investors will be looking ahead to March’s and April’s report, which will be far worse due to the spread of the virus.
UK Minister for Employment Mims Davies was however upbeat, saying that the UK economy has ‘strong foundations’ to tackle the negative economic shock of Covid-19.
Mims Davies said:
‘In the midst of the worst public health emergency in our lifetimes, today’s employment figures have already been overtaken by current events – and we’re doing all we can to help families make ends meet.’
‘But the statistics – including a 4% unemployment rate – do serve as an important reminder of the strong foundations we have built as we look to withstand impact on the global economy.’
Meanwhile, the Pound (GBP) has continued to struggle after Prime Minister Boris Johnson expressed weariness about easing the UK’s lockdown measures too soon for fears that this could lead to a ‘second peak’ of coronavirus infections and fatalities.
Consequently, this has limited the GBP/SEK exchange rate today, with fears rising over how long the lockdown will last and how it will negatively affect the UK economy throughout the course of the year.
Swedish Krona (SEK) Rises Despite Plummeting Oil Prices
The Swedish Krona (SEK) edged higher against the Pound (GBP) despite plummeting oil prices. Yesterday saw oil prices fall into negative territory for May for the first time ever amid growing anxieties of a global storage shortage.
However, we could see the Swedish Krona begin to shed some of its gains in the near-term if oil prices continue to fall, especially as this would severely impede Sweden’s oil-reliant economy.
James Trafford, an analyst at Fidelity International, was upbeat in his analysis:
‘Yesterday’s price action is best understood as a quirk or peculiarity of futures trading. But it isn’t cataclysmic. We don’t see negative oil prices as a new normal, going forward.’
Meanwhile, today saw the release of Sweden’s Unemployment Rate report for March, which fell sharply.
However, Johanna Jeansson, an Economist at Bloomberg, was gloomy in her prediction for Swedish unemployment figures going forward:
‘The headline number masks a clear deterioration in the labor market in March. Less employed, fewer people in the work force and a drop in hours worked shows the beginning of the fallout from the pandemic. We expect unemployment to rise swiftly from here.’
GBP/SEK Outlook: Could Rising UK Covid-19 Cases Further Weaken Sterling?
Pound (GBP) investors will be looking ahead to tomorrow’s release of March’s final Consumer Price Index. However, if this falls below forecasts, we could see the Pound fall further against the Swedish Krona.
The Swedish Krona (SEK) could shed some of its gains, however, if falling oil prices continue to drag on Sweden’s oil-reliant economy.
The GBP/SEK exchange rate will remain volatile this week as Sterling investors monitor the UK’s coronavirus developments. In addition, any signs that Covid-19 infections or fatalities are on the rise in Britain would prove Pound-negative.