Sweden’s Krona got a boost after two consecutive days of losses and after Sweden manufacturing output grew more than the market expectation. At the foreign exchange market the Pound to SEK exchange rate settled at 12.3063 registering a -0.96% loss. During Thursday’s trading hours, currency traders saw the GBP/SE exchange rate fluctuate within a trading range of 12.4071 and 12.2903.
The manufacturing purchasing managers’ index (PMI) as compiled by the Swedbank rose to 47.1 in December compared to 46.7 forecasted data and higher than November’s reading of 45.7. A reading below the 50 mark suggests contraction in the manufacturing sector.
Sweden’s PMI contracted for the fourth consecutive month, however, the decline slowed down indicating signs of stabilization in the Swedish manufacturing industry. This is important for the SEK crosses, which is why Krona staged a solid run on the back of the positive economic data. It is worth to note that the manufacturing sector contracted to levels seen during the European sovereign debt crisis, which is why any exchange rate movement will be limited until more evidence is provided to solidify the recent positive reading. Elsewhere, the annual rate of Household Leading Growth came in at 5% compared to the 4.8% forecasted figure.
During the early Asia trading hours, the GBP/SEK exchange rate was seen quote around the 12.3150 levels.
In the UK, the manufacturing sector contracted to a 7 year low in December. The UK manufacturing output as gauged by the IHS Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) tumbled to 45.6 compared to 49.1 in November. The deterioration seen in the manufacturing sector was exacerbated by the global economic slowdown and Brexit fears scared further investments. As a result the Pound weakened and conversely helped the Scandinavian currency to cling on more gains.
Moving forward, there are no major risk events scheduled on the economic calendar thus traders can expect a liquidity-driven exchange rate.
GBP/SEK Technical Pattern
Looking over the technical pattern, the GBP/SEK pair remains trapped in a wide trading range. As of writing, the pair is trading near the bottom of the range and looks poised to challenge the December low point established at 12.1596.
