Swedish Krona started the first trading day of the week under pressure following solid UK data which boosted the Pound across the board. At the foreign exchange market, the GBP/SEK exchange rate settled up 0.61% at 12.3842, but has been seen quoted on Monday within a trading range of 12.2995 and 12.3984.
The main macro drivers behind the Krona weakness and subsequently Pound strength were due to the pick-up in the UK services sector, which accelerated above the market expectation which came in at 50.0 versus 49.0 in November. A reading above the 50 mark suggests expansion in the UK services purchasing managers’ index (PMI).
On the other hand, the geopolitical tensions in the Middle East continue to drive the risk-off sentiment, and will trump other risk events that can disrupt the market volatility. The Scandinavian currency remains a risk-sensitive currency and the heightened US – Iran tensions will continue to leave a mark on the domestic currency.
Looking forward on the Swedish economic calendar, the Purchasing Managers’ Index (PMI) for the Service sector is due to be published earlier today. The Swedish service sector lost momentum and it stands at the lowest level in 7 years at 47.9. The market consensus is for the service index to inch higher to 48.0 tracking the PMI manufacturing data which recovered to 47.1 in December.
Elsewhere, the UK parliament members will return work on Tuesday after the Christmas break, but the Brexit Bill will be on the agenda starting from Wednesday 8 January. The PM Boris Johnson’s spokesperson told reporters on Monday, that the UK will work on new trade deals with the US and the EU counterparts after the Brexit deadline on January 31.
“Once we leave the EU on 31 January we will be free to hold trade discussions with countries across the world,” he added.
GBP/SEK was up 0.04% to 12.3919 in late Asian session on Tuesday.
