Sweden’s Krona crashed to a 4-year high against the British Pound following the post-BoE rate decision. At the interbank market, on Thursday, the GBP/SEK exchange rate settled up 0.78% at 12.6213, but the pair was seen quoted within a trading range of 12.5083 and 12.6528.
In the UK, the Bank of England left the key benchmark interest rate unchanged at 0.75%. The BoE monetary policy members voted 7-2 to keep rates steady. The only two MPC dissidents were Michael Saunders and Jonathan Haskel. The BoE Governor Mark Carney cited discouraging signs that the UK economy will slow down after Brexit.
On the downside, the BOE slashed its GDP forecast to 0.8% growth in 2020 compared to 1.2% previous growth forecast. At the same time, GDP growth for 2021 as also revised downwards from 1.8% to 1.4%. The BoE also gives hopes that once the side effects of Brexit stabilizes, both growth and inflation in the UK are going to get near the central bank’s targets.
Following the BoE move, the futures markets have discounted any rate cuts in the short-term. However, money market sees a 50% probability of a 0.25% rate cut in September.
“The lingering question of policy easing is unlikely to go away just yet. It all really hinges on whether the economy sees a Brexit bounce,” said BoE Governor Mark Carney during his press conference.
This was Mark Carney’s last policy meeting as the head of the BoE. His successor Andrew Bailey will replace Mark Carney on 15 March. Additionally, the BoE decision came at a pivotal moment for the UK economy. The UK will officially leave the European Union later today at 23:00 GMT.
From a technical perspective, the GBP/SEK pair has made a decisive break above the 2019 high established on 13 December at 12,6263. This marks the highest level for the GBP/SEK exchange rate since 22 December 2015.
GBP/SEK was up 0.27% to 12.6560 in the late Asian session on Friday.
