The Swedish Krona managed to hold the ground against the Pound despite a vigorous rally that propelled Sterling to a five-month high. Now, we’re starting to see the GBP/SEK strength fading ahead of a complicated weekend. We should see some liquidation before the weekend as investors might try to avert being caught in a rough trade scenario where the GBP/SEK exchange rate gaps on Sunday when the Wellington session kicks in.
On Saturday, the UK parliament plans to hold a vote on the Brexit deal that the UK Prime Minister Boris Johnson has secured in Brussels. This spells more risk for the British Pound crosses and for the over the weekend open trades. So, it makes sense to see investors trying to balance their portfolio ahead of this crucial vote.
If the Brexit deal fails to gain support among the UK parliament members, the UK Prime Minister will be required to ask for an extension of the Brexit negotiations. This means more uncertainty. So, if this uncertainty materialize, the risk sentiment will generate more volatility and possible to see a shift in the GBP/SEK trend direction.
It’s not going to be easy to reverse the GBP/SEK bullish trend. But the Brexit theme has the potential to be the catalyst for the sentiment to turn in Swedish Krona’s favor. These macro themes are long-lasting forces that can disrupt the currency trends and generate extreme levels of volatility.
GBP/SEK Technical Pattern
The GBP/SEK traded lower on Thursday but closed the previous trading day indecisive at 12.4913. The daily trading ranges are beginning to get tighter. This means that the GBP/SEK exchange rate is vulnerable of an imminent breakout. Small trading ranges are always followed by big trading ranges.
The key technical levels traders need to keep an eye on are the previous swing high 12.6068 established in early May. Key support level can be found at the weekly opening price 12.3826.
|What do these figures mean?|
|When measuring the value of a pair of currencies, one set equals 1 unit and the other shows the current equivalent. As the market moves, the amount will vary from minute to minute.
For example, it could be written:
1 SEK = 0.080 GBP
Here, 1 SEK is equivalent to approximately 0.080 GBP. This specifically measures the Swedish Krona worth against the British Pound. If the Pound amount increases in this pairing, it’s positive for the Krona.
Or, if you were looking at it the other way around:
1 GBP = 12.50 SEK
In this example, 1 GBP is equivalent to approximately 12.50 SEK. This measures the Pound’s worth versus the Swedish Krona. If the Krona number gets larger, it’s good news for the Pound.