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Swedish Krona sees four consecutive days of weakness against the British Pound. On the inter-bank market, Krona seems unable to recover and poised to challenge the 2019 high one more time.
The GBP/SEK exchange rate closed up on Tuesday, settling at 12.4824. During the early Asia trading hours the GBP/SEK rate was seen quoted slightly higher at 12.5054.
The gains in the Pound to Swedish Krona exchange rate are a function of both Pound strength and Krona weakness. The GBP/SEK currency pair suffers from both sides of the monetary policy spectrum.
The weakness in Krona came amidst last week’s dovish Riksbank minutes, which has motivated traders to dump the domestic currency. The division among Riksbank policymakers in regard to the path of negative interest rate policy has set the tone in the currency market. The Sweden central bank is expected to keep the benchmark interest rate at 0.00%, in case they deliver a hike in December, for years to come.
On the other side of the monetary policy spectrum, the Sterling strength was motivated by the recent developments around the UK general election. The Brexit party leader Farage has basically cleared the path for the Prime Minister Boris Johnson’s Brexit deal.
The current trajectory revealed by the UK pools shows the Conservative Party has the highest probability to gain a majority in the UK parliament.
In other news, the UK economic calendar will bring a high risk event that has the potential to generate some volatility. The UK CPI inflation figures are expected to slow down to 1.6% annualized rate in October versus 1.7% prior reading. Lackluster inflation data can motivate the BOE to cut interest rates. Thus, it can motivate currency traders to dump the Pound especially if wedge growth slumps
GBP/SEK Technical Pattern
On the technical level, Krona is seen trading towards the low of 2019 against the Pound. If Krona can’t defend the 2019 low established at 12.6149 then we could expect Krona weakness to prevail.
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