Pound Swedish Krona Re-Attempts Rally despite Stronger Swedish Inflation

Pound Swedish Krona Exchange Rate Advancing but Gains May Be Limited 

Investors are once again buying the Pound (GBP) today, and the Pound Swedish Krona (GBP/SEK) exchange rate is attempting to climb. However, the Pound’s advances are becoming more volatile as the British currency’s rally slowly runs out of steam. 

Last week’s GBP/SEK movement was narrow and volatile, with the pair ultimately opening and closing the week close to the same interbank level of 11.50. 

This week’s movement has been comparatively a little more bullish. While GBP/SEK has been unable to return to February’s high of 11.59, the pair is still trending above the week’s opening levels around 11.56 at the time of writing. 

Pound investors are highly awaiting tomorrow’s session, when key UK retail and PMI data will be published. 

Pound (GBP) Exchange Rates Remain Appealing Thanks to Strong Data 

The Pound has been broadly appealing across the board lately. The British currency continues to benefit from speculation that Britain’s economy could recover from the coronavirus pandemic before other major economies do. 

Further boosting the Pound’s appeal has been recent UK data, which is indicating that Britain’s economy is currently weathering the pandemic better than feared. 

Yesterday’s UK inflation data was stronger than forecast and analysts believe inflation will continue to rise. According to Analysts at Westpac: 

‘Recent data in the UK has been more robust than forecast and it appears likely that a technical recession will be avoided, despite the likelihood of a sharp contraction in Q1 21. The Bank of England has reiterated that it foresees a consumer-led recovery fuelled by large savings that have been built during the past year of lockdowns.’ 

Swedish Krona (SEK) Exchange Rates Limited despite Strong Inflation Report 

Thursday’s European session saw the publication of Sweden’s January inflation rate results. 

The inflation data largely met expectations month-on-month, falling to –0.4% as forecast. However, the yearly inflation and CPIF figures beat forecasts instead. 

Yearly inflation rose to 1.6% and CPIF inflation rose to 1.7%. 

However, the data was unable to boost market demand for the Krona. Some analysts predicted such a jump in inflation. Analysts at ING noted this morning that the Riksbank is already expecting inflation volatility: 

‘while it may lead to a strong SEK today, the Krona upside should be shortlived as it is unlikely to affect the Riksbank’s stance, with the central bank expecting upcoming volatility in inflation.’ 

Pound Swedish Krona (GBP/SEK) Exchange Rate Awaits Tomorrow’s Key UK Data 

Tomorrow will be the most influential session of the week for UK data. Key stats including retail sales from January and February PMI projections will be published. 

They will give investors a much better idea over how Britain’s economy is weathering the coronavirus pandemic this year so far. 

If UK data beats expectations, market optimism over the speed of Britain’s recovery will rise and the Pound may have room to extend its recent rallies even higher. 

On the other hand though, weak data could offset some of the optimism driving Sterling lately. This could cause GBP/SEK to fall instead. 

Tomorrow will also see the publication of Sweden’s capacity utilisation stats and monetary policy meeting minutes from Riksbank. Any surprising tone from the Riksbank minutes could influence the Swedish Krona’s movement. 

Of course, continued developments in the coronavirus pandemic and vaccine rollout will influence the Pound to Swedish Krona (GBP/SEK) exchange rate as well. 

Josh Jeffery

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