Swedish Krona erased some of the early losses after the Fed cut rate for the third time this year. The GBP/SEK exchange rate closed down at 12.4477 during yesterday’s trading session. Before the London opening session the GBP/SEK exchange rate was seen hovering unchanged around the previous day closing price.
The no deal Brexit risk has severely diminished, which encouraged investors to brush off the negative sentiment reading in the Pound. However, the upcoming UK election called on December 12 can resuscitate some of the negative risk.
Since the UK Prime Minister Boris Johnson was sworn into office, the Conservative Party has surged in the polls. But, the UK electoral system makes it harder to predict how many mandates the Conservatives will manage to steal. The outcome of the UK election will keep the Pound crosses in tension.
If the Conservatives manage to secure a solid majority in the UK parliament, this will give Prime Minister Johnson the ability to move forward with his Brexit deal without too many problems. The worst case scenario, is where we won’t have a political stability in which case the most likely outcome will be another extension of the current 31 January deadline.
The economic conditions in Sweden still point to more downside risk. The hawkish Riksbank rate decision wasn’t able to provide a turning point for the Krona as the macro economic data still points to a weaker Krona.
GBP/SEK Technical Pattern
From a technical point of view the GBP/SEK exchange rate continues to trade in a nervous trading range. On the upside, investors should keep an eye on the key resistance level 12.5350, while on the downside the previous week low established at the 12.3240 can provide some support for the GBP/SEK exchange rate. If the bullish momentum gets more traction we should see another attempt from the GBP/SEK exchange rate to break the current 2019 high established at the 12.6149 level.