The Swedish Krona is rising against the British Pound after Riksbank’s Governor comments hit the market. Wednesday, on the currency exchange market, Krona settled at 12.4582, up 0.01% from the previous closing price. Not before reaching a high of 12.5367.
However, during the early Asia trading hours, the GBP/SEK exchange rate was seen quoted slightly higher at 12.4811.
On Wednesday, Sweden’s central bank Riksbank published its second Financial Stability report of the year. Riksbank Governor Stefan Ingves reiterated that the negative interest rate policy gives rise to financial stability risks.
According to the Financial Stability report, Swedish economy remains exposed to both internal and external economic shocks. Also, low interest rate policy and higher levels of household debt are considered by Riksbank to be the main domestic threats for Sweden’s financial system.
Currency traders interpreted the comments as a positive sign that the world’s oldest central bank is ready to leave behind for good the negative interest rate policy. The NIRP was first introduced by the Riksbank in the aftermath of the subprime mortgage crisis in an effort to cope with recession.
“If economic development becomes significantly weaker than expected or if willingness to take risks suddenly decreases, vulnerabilities that have built up in the financial system could be exposed,” the Sweden central bank said in its Financial Stability report.
Riksbank Governor added that while the December rate hike is a done deal, the interest rate is expected to stay low for a considerable time.
The Swedish debt office managed to sell at the latest SGB auction a modest SEK 1.5 billion worth of 5-year and 10-year government bonds.
GBP/SEK Technical Pattern
On the technical front, the GBP/SEK price pattern remains trapped in a big consolidation zone that started since mid-October. The long term trend sentiment remains stacked against the Swedish Krona which continues to hover near the 2019 high established at the 12.6149 on 16 October.