GBP/SEK: Krona Hits 10-Weeks High, Riksbank Abandons NIRP

On the interbank market, Swedish Krona touched a new 10-weeks high taking advantage of the Riksbank’s move to abandon negative rates. On Wednesday, the GBP/SEK exchange rate settled at 12.2410 registering a +0.69% gain, and traded within a range of 12.3553 — 12.2382. However, during the early Asia trading hours, the GBP/SEK exchange rate was seen stabilizing higher and trading around the 12.2660 level.

The world’s oldest central bank has abandoned for the first time in 10 years its negative interest rate policy NIRP. As per the market consensus, Sweden central bank didn’t disappoint the markets and delivered its promised interest rate hike. Riksbank raised rates by 0.25 basis points from -0.25% to 0.0%.

The move was cheered by currency traders, but the overall tone remains cautious as the slowdown in the EU’s economy and the global economy will continue to hinder over Sweden’s heavily export driven economy. On the other hand, yesterday’s decision to lift interest rates was against the global easing trend and at odds with the ECB and the US Federal Reserve.

Overall, Riksbank Governor Stefan Ingves has delivered a dovish rate hike as the bank’s forecast shows interest rate to remain on hold through 2020 and the year to come.

Elsewhere, from the other side of the monetary policy spectrum, the Bank of England kept its benchmark interest rate on hold at 0.75%. Among BOE policy members, there were two dissents that voted for a rate cut. The current BOE Governor Mark Carney is due to stand down at the beginning of 2020.

Overall, the BOE policy members are still trying to assess how much of the Brexit uncertainty has faded away and its subsequent impact on the UK economy.

Looking forward over the economic calendar, local traders are expecting the release of the Swedish Retail Sales data for November, which has the potential to give another boost to the Scandinavian currency.

GBP/SEK Technical Pattern

From a technical perspective, the GBP/SEK price action has broken to the downside the 2.5 month old trading range, but the breakout wasn’t decisive enough to suggest a material change in the long-term bullish GBP/SEK trend.

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