The Swedish Krona is again at the mercy of the British Pound. However, the new week of trading only sees GBP/SEK exchange rate slightly lower despite the downturn in the Brexit progress. The main force driving the GBP/SEK exchange rate is the Brexit debacle. While the Brexit negotiation saw tremendous progress, the enthusiasm was deflated on Super Saturday. The UK parliament members failed to back UK Prime Minister Boris Johnsons’ deal secured with the EU leaders. Actually, the UK lawmakers delayed the Brexit vote on the new divorce deal.
Britain is officially set to leave the 28 nation bloc on 31 October. However, now the UK lawmakers are asking for a third extension, which may or may not be agreed by Brussels.
The worst case scenario is Britain leaving the EU without a deal, which can have economic consequences for both sides.
With only 10 days left to go until the Brexit deadline and with the increased risk of a no-deal scenario, the currency market is more likely to experience high periods of volatility until the uncertainty fades away.
From the other side of the monetary policy spectrum, we have the Riksbank interest rate decision, which can add more volatility into the mix. The market consensus is for the benchmark interest rate to remain unchanged. Sweden’s central bank is only expected to signal a delay of its next rate hike.
The seasonal pattern will also likely keep Swedish Krona under pressure until the end of the month
GBP/SEK Technical Pattern
The Swedish Krona has been under tremendous pressure over the last couple of weeks, but we already reached several levels of oversold readings. The GBP/SEK only marginally broke above the previous swing high 12.6068 which is why another attempt to break higher can’t be ruled out.
The key levels to watch are support level 12.3138 followed by 12.1920. While on the upside, a daily break and close above 12.6068 can open the door for a retest of the round number 13.0000.
|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.