GBP/SEK: Krona Lacking Clear Direction on FX Market

The Swedish Krona is lacking a clear direction on the FX market and remains almost unchanged since the beginning of the week.

Thursday, on the currency exchange market, Krona settled at 12.4259, up 0.26% from the previous closing price. However, during the early Asia trading hours, the GBP/SEK exchange rate was seen quoted slightly higher at 12.4307.

On the fundamental front, key data from the EU and UK manufacturing and services sector scheduled to be released during the London trading hours, can provide more clarity for the SEK trend. From the other side of the monetary policy spectrum, the UK’s PMI is forecast by most economists to show contraction in the UK’s manufacturing sector.

The market consensus is for a downtick in the manufacturing activity, which is expected to print a 49.0 increase versus prior October reading of 49.6. On the other hand, Services PMI figures are expected to come flat at 50.0. The ongoing political and economic uncertainties are expected to weigh in on the key sectors in the UK economy.

Looking ahead, Wall Street analysts are expecting the output in the UK manufacturing sector to remain subdued due to external headwinds such as weak global trade, and internal threats such as a slowdown in UK economic activity due to no-deal Brexit fears.

Germany, which is the EU’s economic growth engine, is expected to shrink by -4% in 2019, remaining stuck in recession. According to the market consensus, the PMI figures in Germany are expected to grow by 42.9 versus 42.1 prior readings. The contraction in the manufacturing sector has been going on since the beginning of the year.

Sweden economy is highly dependent on EU exports, thus investors will make bets on the currency market and may sell the SEK if the economic conditions are deteriorating.

GBP/SEK Technical Pattern

On the technical front, the GBP/SEK price pattern remains unchanged from last week. The long-term trend continues to disfavor Swedish Krona which continues to hover near the 2019 high established at the 12.6149 on 16 October.

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