GBP/SEK: Krona at the Mercy of UK Election Outcome

Swedish Krona is headed for an interesting week as the Scandinavian currency remains at the mercy of the UK election outcome. Last week on the currency market Krona tumbled against the Pound getting near the 2019 low. The GBP/SEK exchange rate settled at 12.4735 up registering a 0.76 gain. Against the Euro, Krona rallied to an 8-week high settling at 10.4825.

In Sweden, the data showed a clear slowdown in industrial production. Sweden’s industrial production figures published on Friday revealed a deteriorating environment as the data dropped from -0.8% to -1.3% in October. The data came as no surprise as it followed the general downturn in the entire manufacturing sector. Sweden’s Manufacturing PMI contracted for the third consecutive month, falling to 45.4 in November versus 46.o reading seen in October.

Last’s week trading session saw the GBP/SEK within the range of 12.3098 -12.5014. However, during the early Asia trading hours, the GBP/SEK exchange rate was seen quoted higher at 12.5155 as Krona continued to lose more ground against the Pound.

Krona remains at the mercy of the UK election outcome scheduled this Thursday on 12 December. At stake is the success or failure of PM Johnsons’ divorce bill. Latest poll numbers still show the Conservative Party consolidating its lead at 10 point lead over the Labour Party.

According to the recent CFTC data released on Friday, currency traders have increased their bullish GBP bets. Investors are pouring into the Pound due to upraised Brexit optimism and diminished probability of a no-deal Brexit.

Looking ahead over the economic calendar this week’s inflation figures will provide more material information over the current economic state before the upcoming monetary policy meeting. It will require a really dramatic drop in inflation for the Riksbank not to pursue in its ambition to abandon the negative interest rate policy NIRP.

GBP/SEK Technical Pattern

On the technical front, the GBP/SEK price pattern has made some progress to the upside and now the recent bullish momentum behind the rally has the potential to motivate a break above the 2019 high established at 12.6149 on 16 October.

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