Swedish Krona continues to struggle to find a clear direction as global markets continue to digest Fed’s interest rate cut and the message of being on hold. The GBP/SEK exchange rate closed up at 12.4860 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.
On the UK economic calendar, the main risk events scheduled for the session ahead is the Manufacturing PMI data which, according to the market consensus should inch lower to 48.2 versus 48.3 previous reading. The slowdown in the manufacturing sector is driven by the Brexit uncertainties and partially by the trade war tensions. The deflationary risk amid the global slowdown in manufacturing activity can exacerbate the slowdown in the UK manufacturing activity.
The upcoming UK election scheduled for December 12 will continue to posses some threats to the currency exchange rate. Most likely the global currency market will try to discount the most likely scenario. But, since the UK electoral system makes it harder to predict who will win, we’re left with a level of uncertainty that can resuscitate some of the negative Pound risk.
The lack of momentum in the currency space is an indication of a negative SEK sentiment. Despite the Riksbank’s desire to leave behind negative interest policy, investor’s appetite for the SEK remains mild. This is due to the Swedish economic growth prospect which remains subdued amid the global trade tensions and expansionary monetary policy.