Swedish Krona is strengthening against a British Pound that has seen some moderate selling pressure. The GBP/SEK exchange rate closed down on Wednesday, settling at 12.3669 and before the London opening session, the GBP/SEK rate was seen quoted slightly higher at an exchange rate of 12.3802.
The main macro factors that have motivated investors to pour funds into Swedish Krona were positive data from the European manufacturing sector. The German manufacturing industry saw an uptick in factory orders while the Markit PMI Composite figures came in better than expected at 48.9 versus 48.6 prior readings.
Across the EU zone the manufacturing industry data have painted a positive picture over the EU economy, suggesting that the EU industry may be bottoming out. Eurozone PMI data have beat the market expectation and came in at 50.6 versus 50.2 prior readings. As long as the Markit PMI Composites remains above the 50 mark, which separates growth from contraction, the EU economy remains in good standing.
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Traders are eyeing next, the key BOE interest rate decision scheduled on the UK economic calendar later today during the London session at 12:00 GMT. The BOE is expected to keep its interest rate policy unchanged. The UK benchmark interest rate is currently standing at 0.75%.
Sweden’s central bank gives birth to negative interest rates. In 2009 right in the aftermath of the subprime mortgage crisis, the Riksbank has lowered its benchmark interest rate to negative 0.25% going against the conventional monetary policy practices.
Most Riksbank policymakers now believe that it’s premature to abandon negative interest rate policy. However, they are also aware of the fact that prolonged negative rates may signal the wrong message among people and it may be considered something permanent. Ten years later, the GBP/SEK exchange rate is seen hovering near the same levels it was when the Riksbank introduced negative interest rate policy.
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