Swedish Krona is surging against the British Pound ahead of this week’s BOE interest rate decision. The GBP/SEK exchange rate closed down the previous trading week at 12.3714. Before the London opening session the GBP/SEK exchange rate was seen quoted unchanged around last week close.
While in the short-term investor’s appetite for the Swedish Krona has improved, in the long run investor’s appetite remains subdued. Swedish economic activity remains moderate due to macro factors such as the trade war tension, Brexit uncertainties and last but not least due to the expansionary monetary policies.
The change in the GBP/SEK momentum pace may be driven by investors liquidating their Pound exposure ahead of the key BOE interest rate decision scheduled on Thursday, 7 November.
According to the general market consensus the BOE is expected to keep its interest rate policy unchanged. The UK benchmark interest rate is currently standing at 0.75%. Last time the Bank of England has raised interest rates was on 2 August 2018 when the BOE hiked rates by 25 basis points from 0.5% to 0.75%. Since then the interest rate policy hasn’t been adjusted due to mounting Brexit fears.
With the upcoming UK election in sight scheduled on December 12 and a new Brexit deadline, it’s very unlikely for the BOE to have the stamina or the room to signal further tightening monetary policy. The outlook for the UK economic growth remains weak due to the Brexit effect. The BOE is only forecasting an annual growth rate of 1.5% for this year and 2020.
Traders should keep an eye on how many dissidents inside the MPC members are. Michael Saunders and Gertjan Vlieghe, have said that a rate cut might be needed soon due to Brexit uncertainty.
GBP/SEK Technical Pattern
The GBP/SEK technical pattern has made some progress, but it’s still trapped inside a very narrow range between support level 12.3111 and resistance level 12.6149. This is also the current 2019 high. For the momentum to get more traction we need a more decisive break out of the current consolidation.