Pound to Swedish Krona Exchange Rate Recovers as Sweden’s Outlook Uncertain
Britain’s concerning coronavirus outlook has been pressuring Sterling (GBP), but the Pound Sterling to Swedish Krona (GBP/SEK) exchange rate is climbing today. Despite some stronger than expected Swedish data, the Swedish Krona (SEK) is struggling to hold highs.
Despite concerns over Sweden’s handling of the coronavirus pandemic, the currency has seen months of strong performance. GBP/SEK continued to struggle last week, sliding a little lower into the interbank region of 11.70.
This week though, GBP/SEK has tumbled even lower. GBP/SEK touched on a fortnight low of 11.57 last night. Even this morning’s recovery is limited, with the pair having only climbed to around the level of 11.64.
Fears of a ‘second wave’ of coronavirus infections are spooking markets today. If they worsen, they could distract from more key Swedish data due later in the week.
Pound (GBP) Exchange Rate Drive Limited amid Market Risk-Aversion
The Pound (GBP) has been jittery in recent sessions. This is despite Britain’s latest data coming in more strongly than expected across the board.
Markets are perceiving the Pound as an increasingly risky buy. This is due to a broad combination of factors, including the coronavirus pandemic’s prolonged impact on Britain’s economy, as well as concerns that a no-deal Brexit outcome is still likely.
In fact, according to analysts at Bank of America (BofA), the Pound is starting to behave like an emerging market currency.
According to Kamal Sharma, Currency Analyst at BofA:
‘The Pound increasingly resembles the more liquid emerging market currencies rather than a core G10 currency,’
Yesterday’s UK PMI projections showed Britain’s economy was outperforming gloomy forecasts. However, investors still perceive the currency as too risky so its appeal has been limited.
Swedish Krona (SEK) Exchange Rates Struggling to Hold as ‘Second Wave’ Coronavirus Fears Worsen
The Swedish Krona (SEK) has seen months of strong performance, despite Sweden’s lax actions to tackle the coronavirus pandemic.
Sweden’s government has come under criticism for not enacting a tougher lockdown. While markets have largely overlooked this due to optimism that the global economy could recover from the pandemic, returning fears could hit the Krona harder.
SEK is often correlated to market risk and trade-sentiment. As fears of a ‘second wave’ of infections rise, the Krona is struggling to hold its highs.
This morning’s stronger than excepted Swedish confidence data was not even enough to prevent the Krone from being hit lower by fresh market risk-aversion.
Pound to Swedish Krona (GBP/SEK) Exchange Rate Increasingly Focused on ‘Second Wave’ Fears
While multiple key ecostats have been published this week, they have seemingly had little impact on the Pound to Swedish Krona (GBP/SEK) exchange rate.
Data showed that both Britain and Sweden’s economies were performing better under the coronavirus pandemic than expected.
However, global markets are becoming increasingly anxious about a possible ‘second wave’ of infections.
There are concerns that Sweden’s economy, which never saw particularly strong lockdown measures, could be hit even harder by a ‘second wave’. There is concern that this could negatively impact Sweden’s business activity and confidence.
However, if risk-sentiment continues to weaken this is likely to weigh on Sterling as well.
While tomorrow’s Swedish retail sales could cause some movement, jittery volatility is likely in the Pound to Swedish Krona (GBP/SEK) exchange rate.