GBP/SEK Exchange Rate Sinks as Sweden’s Economic Outlook Improves
The Pound to Swedish Krona (GBP/SEK) exchange rate fell by -0.4% today, with the pairing currently trading around 11.377kr.
The Swedish Krona (SEK) rose today following the publication of Sweden’s Manufacturing PMI for November, which beat forecasts and rose to 59.1 – its fastest growth since 2017.
Jörgen Kennemar, an analyst at Swedbank, commented:
‘Swedish industry continues to show robust growth at the same time as production plans have become more expansive despite an increased spread of infection and stricter restrictions.
‘Instead, order intake for Swedish industry continues to increase, not least from the export market.’
As a result, demand for the Swedish Krona has risen, with hopes growing that Sweden’s economy could be on the road to recovery.
Nonetheless, the bank HSBC is optimistic that both Sweden and Norway will outperform the rest of the developed world.
James Pomeroy, an economist at HSBC, commented:
‘Scandinavia’s economies saw a strong rebound in Q3 2020. Growth rates may not look as strong as elsewhere in the world on a quarterly basis, but the annual declines are smaller than most developed economies.’
Pound (GBP) Falls as Brexit Uncertainty Returns Amidst Crucial Week
The Pound (GBP) struggled against the Swedish Krona today despite a stronger-than-expected UK Manufacturing PMI for November, which rose to 55.6.
Nevertheless, with the UK facing high degrees of uncertainty over Brexit and the Covid-19 situation, GBP investors have remained cautious.
Duncan Brock, the Group Director at the Chartered Institute of Procurement and Supply, commented on the data:
‘Panic buying aside, there was little in the figures to suggest a sustainable recovery once we move into 2021. Job shedding continued last month, and new business could drop off a cliff in January as potential border disruptions are thrown into the mix. The prospect of an extended recession continues to hover above the UK economy until clarity around a Brexit deal is reached and hopes for an effective vaccine supply chain are realised bringing much-needed normality.’
Meanwhile, UK Foreign Secretary Dominic Raab said that Brexit talks are entering their ‘last week or so’ of ‘substantive’ talks.
Mr Raab also suggested that there is a ‘Brexit deal to be done’. However, he also warned that the EU needed to show ‘pragmaticism’ for both sides to secure a trade agreement before the end of the year.
As a result, GBP investors are remaining largely cautious as UK-EU trade talks continue.
GBP/SEK Outlook: UK Services PMI and Brexit Developments in Focus
Pound (GBP) will be looking ahead to Thursday’s release of the UK Services PMI for November.
If this emerges out of contraction territory, then we could see Sterling head higher.
Brexit developments will continue to drive the GBP/SEK exchange rate this week.
Any further signs of a possible no-deal Brexit at the end of the year would be GBP-negative.
Meanwhile, the Swedish Krona (SEK) could continue to head higher if the outlook for the Swedish economy remains bright throughout December.