The Swedish Krona touched a new 2019 low against the British Pound. The move seems to be motivated by growing hopes that the British Prime Minister Boris Johnson and the bureaucrats in Brussels can reach a Brexit deal before the 31 October deadline.
The Brexit market theme being the main macro driver of the GBP/SEK exchange rate, it’s no surprise to see the Pound on a wild ride. The Swedish Krona is helpless against a British Pound that is gaining traction across the board. Actually, Sterling rose sharply against most of its counterparts. With only 12 days left until the official departure date, there seems to be no reason for the market to calm down.
The Brexit negotiations are still alive, as no official consensus has been reached, so expect any news headlines related to the Brexit talk to be the catalyst for more volatility in the GBP/SEK exchange rate.
On the other side of the monetary policy spectrum, there are no big risk events that have the potential to disrupt the market volatility. The upcoming Riksbank interest rate decision, Sweden’s central bank is only scheduled at the end of the next week on 24 October.
GBP/SEK Technical Pattern
On the technical side, the seasonal pattern reveals that the Swedish Krona could perform bad throughout the month of October. However, in order to see more conviction into the current GBP/SEK bullish trend, we need a daily technical close above the 12.6074 high reached on 6 May.
We already reached several levels of overbought readings, so we can’t rule out a pause in the trend. Several possible outcomes can result from the current GBP/SEK elevated levels. And all trade outcomes are influenced by the intensive Brexit talks.
|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.