Swedish Krona has continued to strengthen on the currency market against the British Pound amid dovish BoE interest rate decision. Krona saw gains against the Pound for a second consecutive day, reaching a one month high.
The GBP/SEK exchange rate closed down on Thursday, settling at 12.3444, but not before seeing a week low at 12.2559. Before the London opening session, the GBP/SEK rate was seen quoted almost unchanged near yesterday close.
The main catalyst behind the surge in Krona rate was mostly due to the Pound weakness. It sold off post-BoE (Bank of England) interest rate announcement. As per the market consensus, BoE kept its interest policy unchanged, keeping the UK’s benchmark interest rate at 0.75%.
The dovish BoE surprise came from the Monetary Policy Committee (MPC) split vote on interest rates. Out of the nine MPCs members, two BOE’s policymembers Jonathan Haskel and Michael Saunders, voted for a rate cut. The 7-2 vote has motivated fresh Pound selling pressure. The market is now seeing an 80% probability of a BOE interest rate cut next year.
BOE Governor Mark Carney cited the slowdown in global growth and Brexit headwinds as a reason to keep interest rate unchanged. It is also reckless to adjust the interest rates ahead of a snap election that can reshape the UK political landscape and the Brexit outcome.
“These are pretty big tectonic forces operating right now… If global growth fails to stabilize or if Brexit uncertainties remain entrenched, monetary policy may need to reinforce the expected recovery in UK GDP growth,” said the BOE Governor Mark Carney during the BOE press conference.
Additionally, BoE slashed its growth forecast and it expects the UK GDP to be 1% lower by the end of 2022.