Pound Swedish Krona (GBP/SEK) Exchange Rate Near Monthly Best as UK Growth Beats Forecasts

Pound Swedish Krona Exchange Rate Climbs as Riksbank Hits Krona

The Pound (GBP) has seen a strong rebound this week, and the Pound Sterling to Swedish Krona (GBP/SEK) exchange rate has essentially regained all of the losses it saw over the past month. The Swedish Krona (SEK) was hit hard by this week’s Riksbank news.

Since opening this week at the interbank level of 11.18, GBP/SEK has seen a rebound in demand. GBP/SEK surged higher and yesterday touched on a month best of 11.41.

While GBP/SEK has slipped back to the interbank level of 11.38 at the time of writing, it has still seen significant gains this week overall.

Central bank news caused a lot of movement this week. However, coronavirus developments could return to focus next week.

Pound (GBP) Exchange Rates Still Supported but Recession Fears Limit Appeal

Friday’s European session saw the publication of Britain’s November growth rate results. The data beat forecasts in key prints, with the 3-month average coming in at 4.1% rather than the forecast 3.4%.

However, the data was not relieving enough to offset concerns about Britain’s economy. It showed that the nation had definitely been hit hard by November’s coronavirus lockdown, and markets now expect Britain to suffer a ‘double-dip recession’.

Today’s other UK data also beat forecasts. Despite gloomy expectations for Britain’s economy, Sterling performed well this week as negative rate cut bets softened.

Overall, Britain’s outlook may not be quite as gloomy as markets had been expecting a week ago.

Swedish Krona (SEK) Exchange Rates Steadying after Riksbank Shock

Earlier in the week, Sweden’s national bank, the Riksbank, announced it would revamp its foreign-reserve program. The bank will sell the equivalent of more than 1% of GDP a year in SEK to phase out foreign loans.

As a result, the Swedish Krona tumbled around 1% against its rival the Euro (EUR).

Despite the bank’s own aims, markets speculate it could also be a move to put a lid on the Swedish Krona’s recent strength. The Krona was one of last year’s best-performing major currencies.

According to Lars Henriksson, Strategist at Handelsbanken:

‘regardless of the official picture, it is difficult to depart from the fact that the decision comes very quickly at a stage when the Riksbank’s executive board has expressed concern about the rapidly rising Krona exchange rate.’

Pound Swedish Krona (GBP/SEK) Exchange Rate Could Climb on Coronavirus Recovery Hopes

For now, investors may have little reason to start buying the Swedish Krona again. While the currency spent much of the past year bullish, the currency will likely continue to price in the latest Riksbank news.

What’s more, the Pound may have more room to recover depending on how Britain’s coronavirus situation develops.

Markets are hoping that as Britain’s latest coronavirus lockdown enters its third week, there may start to be a more solid fall in domestic infection rates.

If the situation shows signs of calming, the Pound’s recent recovery is more likely to keep recovering.

Next week will also see the publication of some key stats, including UK inflation, retail sales and January PMI projections.

Sweden’s economic calendar will be fairly quiet though. This will leave the Pound Swedish Krona exchange rate being driven more by the Pound and lasting reaction to the Riksbank news.