GBP/SEK: Krona Pares Losses as Riksbank Ditched NIRP

Sweden’s Krona pares losses against the greenback after Riksbank’s minutes of the December meeting revealed that negative interest rate policy NIRP is not an option anymore. Basically, Sweden’s central bank has ditched NIEP from its policy arsenal in its fight against lower economic growth.

At the interbank market, the GBP/EK exchange rate settled down -0.26% at 12.387, but was seen quoted on Wednesday within a trading range of 12.4366 and 12.3671.

Riksbank Governor Stefan Ingves reiterated that the appropriate reaction to a downturn in economic activity is an expansion of the central bank’s balance sheet. Among the Riksbank policy members the minutes revealed that deputy governors Per Jansson and Anna Breman were among the dissidents and opposed bringing the interest rates from negative 0.25% to 0%.

“In this scenario, a large expansion of our balance sheet is closer to hand than a negative policy rate below what we have seen in the past five years,” Riksbank minutes revealed.

In other news, retail sales in Sweden contracted by -0.4% in November compared to 0.2% prior reading and softer than the forecast growth of 0.3%. The year-on-year percentage growth in retail sales plunged even more. On a yearly basis retail sales only grew by 1.3% compared with previous reading, which was revised down to 3.3% from 3.5%.

Elsewhere, the European Commission President, Ursula Von der Leyen made again some waves through the financial market after a speech in London. The EU Chief warned that Britain won’t have the “highest quality access” to the EU customs union and single market unless the UK government led by Boris Johnsons makes some major concessions.

At the same time, the European Commission President has expressed concerns over the viability to reach an all-inclusive trade deal by the end of 2020.

The GBP/SEK technical pattern ended the previous day in negative territory, but the risks are still skewed to the upside. The pair saw some downside pressure only after it marginally broke above the previous week high.

GBP/SEK was up 0.03% to 12.3919 in late Asian session on Thursday.

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