 |
The Swedish Krona tumbled on Wednesday after weak inflation data prompted currency traders to sell the domestic currency.
On the interbank market, Krona closed on a negative tone against the Sterling for the fifth consecutive day. The GBP/SEK exchange rate closed up on Wednesday, settling at 12.5088 or 0.23%. During the early Asia trading hours, the GBP/SEK rate was seen quoted slightly higher at 12.5225.
Sweden’s inflation reading for October came flat, in line with the market consensus at 1.6%. This was in line with the era of global disinflation. Riksbank’s 2% inflation target is not far away to prompt investors to be skeptical over Riksbank December’s rate hike.
Riksbank, the Swedish central bank, is expected to unwind negative interest rate policy during its next monetary policy meeting. Some currency traders have dumped Krona since early 2018, making it one of the worst-performing currencies among major nations.
Year-to-date, Krona has lost -8.78 of its value mostly due to sluggish economic growth activity. This was amplified by external factors such as reduced global economic output and trade war tensions. The Swedish economy depends on foreign trade and the slowing global demand is a key source of distress for the domestic producers.
On the UK economic calendar, the Retail Sales figures are scheduled to hit the market after the London open. The UK Retail Sales rose by 0.6% in October. According to the market consensus, the next reading will only show a 0.2% increase.
Yesterday’s UK inflation reading painted a dire outlook for the UK economy, which may prompt the BOE to deliver a rate cut. The headline inflation in the UK slowed to 1.5% from 1.7% previous reading.
GBP/SEK Technical Pattern
On the technical level, the GBP/SEK exchange rate is slowly but surely making progress towards the 2019 high established at 12.6149 on 16 October. On the downside, the previous week high established at 12.4462 can provide traders with an intermediate support level.
