The value of Sweden’s Krona decreased against the British Pound after the inflation rate in the Scandinavian country rose in December by 0.4%. At the foreign exchange market, the GBP/SEK exchange rate settled down -0.16 % at 12.3394, but the pair was seen quoted on Wednesday within a trading range of 12.3472 and 12.2978.
In Sweden, the annual inflation rate remained steady at 1.7% in December supporting the Riksbank’s decision to keep interest rates unchanged in the coming years. Sweden central bank hiked rates by 0.25% to 0% at its December meeting. The headline monthly rate of inflation for December confirmed the market forecast and picked up by 0.4% compared to 0.1% previous reading.
The acceleration in inflation was motivated by higher energy prices. The upward pressure from oil prices led to an increase in inflation in December. At the end of December, crude oil price rose to the highest level in 8 months trading for $64.0 per barrel.
Most Wall Street analysts are predicting inflation in Sweden to remain steady at 1.8% through 2020. The global headwinds will limit the Riksbank’s ability to fulfil its mandate and deliver its 2% inflation target.
From the other side, the UK inflation reading cools down to 1.3% in December, the slowest pace since 2016, said the Office for National Statistics on Wednesday. The inflation print has boosted speculations that the Bank of England will cut interest rates at its next policy meeting on 30 January. The rate of inflation was expected to come in at 1.5% below BOE’s 2% inflation target.
On the currency market, following the lackluster economic data, the British Pound dropped cautiously. The GBP to USD exchange rate seems to stabilize near the big psychological number 1.3000.
The GBP/SEK technical pattern seems to follow the bearish pattern started since the beginning of the week. The pair is witnessing again some downside pressure after Tuesday’s failed attempt to rally.
GBP/SEK was up 0.05% to 12.3461 in the late Asian session on Thursday.