Swedish Krona strengthens against the pound ahead of the key interest rate decision. The Riksbank is scheduled to announce its monetary policy decision tomorrow, on 24of of October. Most Wall Street analysts agree that Sweden’s central bank will keep interest rates unchanged at -0.25%. More, the benchmark interest rate is expected to be kept on hold through 2020 and beyond.
However, on the other hand, the Riksbank has been signaling its plan to leave behind negative interest rate policy and hike rates early next year. But the Sweden slow economic growth driven in part factors like the US – China trade war, the slowdown in the European Union and Brexit have been adding extra pressure on the hawkish plan. Riksbank’s ability to hike rates in the near future is tight to these macro forces.
Both the manufacturing and service sectors in Sweden are contracting. The inflation also drifts further away from the Riksbank’s 2% target while the GDP figures during the first half of the year depict a very dark scenario for the Swedish economic growth prospect.
From the other side of the monetary policy spectrum, the Bank of England is not expected to change its interest rate policy anytime soon. The Brexit debacle has for sure minimized the BOE’s ability to hike interest rates.
With only 8 days to go until the official departure date, the UK lawmakers are threatened with general election if they don’t support PM Boris Johnson’s divorce bill. If the UK Prime Minister is not able to find support for his Brexit timetable, making it less likely for the UK to leave the EU before the 31 October deadline. The risks for a no-deal Brexit scenario are increasing and investors are already dumping the British Pound in the face of big uncertainty.
GBP/SEK Technical Pattern
The GBP/SEK exchange rate finished the previous trading day down at 12.4272 erasing all of the losses from the previous week. However, a daily break and close below the intraday support level 12.400 would be required in order to see the Swedish Krona gaining more traction.