Pound Sterling Swedish Krona (GBP/SEK) Exchange Rate Muted as UK Staffing Levels Remained ‘Disappointingly Low’
The Pound Sterling Swedish Krona (GBP/SEK) exchange rate remained flat. This left the pairing trading at around 11.2853Kr.
Sterling was offered some support this morning after the latest flash PMI data showed growth returned to the UK private sector.
Output growth jumped to a five-year high as the economy reopened, gathering momentum. GBP was supported as both the manufacturing and services sectors returned to growth this month.
The services PMI even rallied to a 60-month high of 56.6, while manufacturing rose to 53.6, the highest level since March 2019.
However, this did not send the Pound higher against the Krona, as the pairing remained flat. Data highlighted fears about staffing levels across both sectors which limited gains.
Commenting on the latest data, Duncan Brock, Group Director at CIPS, said:
‘Following last month’s good results, recovery in July across the manufacturing and services sectors gathered pace as the PMI figure made a sudden jump to show the fastest growth since June 2015.
‘Amidst this brightening picture, there were some winners and losers. Some parts of the economy performed better than others, both through luck with being early to reopen and good adaptation in responding to the challenges of the pandemic. The biggest concern is that staffing levels remained disappointingly low across both sectors, as furlough schemes came to an end and redundancies started to appear. As firms look to the future with concerns over the strength of the economy and any second wave hampering progress, Brexit looming on the horizon was also a concern that has begun to feature again for a number of businesses.’
Swedish Krona (SEK) Flat as PPI Tumbles
The Swedish Krona struggled on Friday after data revealed the country’s producer prices slipped in June.
Sweden’s Producer Price Index (PPI) tumbled at an annual rate of -3.8%, and month-on-month slumped by -0.2%. This was the sixth monthly decline and weighed on the Swedish currency.
Meanwhile, Sterling received some support at the end of the week after retail sales rose back towards pre-Covid-19 levels.
June saw sales increase as non-essential retail stores in England were able to reopen, which boosted the sales of clothing.
According to Samuel Tombs of Pantheon Macroeconomics:
‘The surge in retail sales volumes […] in June is not a sign that households’ overall spending also is recovering fully and rapidly.’
Sales volumes rose by a higher-than-forecast 13.9% last month. The data also revealed a 70% jump in the sales of clothing and footwear, reversing much of the earlier slump due to the coronavirus crisis. However, the sector remains one of the worst-hit and spending is currently -35% below pre-pandemic levels.
Added to this, retail sales only account for around a third of consumer spending. Other figures show that people remain cautious about returning to places such as bars and restaurants.
Pound Swedish Krona Outlook: Will Brexit Pessimism Weigh on GBP?
Looking ahead to Monday, the Swedish Krona (SEK) could edge higher against the Pound (GBP) following the release of Sweden’s Household Lending Growth data.
If June’s household lending growth rises more than expected, it will offer the Krona support.
Meanwhile, Brexit pessimism could weigh on Sterling at the start of the week. If traders remain focused on the lack of progress during UK-EU trade talks, it will leave the Pound Swedish Krona (GBP/SEK) flat at the start of next week.