GBP/SEK: Riksbank To Keep Rates Steady

The pound traded flat versus the Swedish Krona on Tuesday. Despite pushing to a high of 12.5144 on the day, the pound was unable to maintain its strength and slipped lower.

GBP/SEK is advancing in early trade on Wednesday as investors look ahead cautiously to the Riksbank monetary policy announcement. At 07:30 GMT the pair is trading 0.1% higher at 12.4895.

Swedish Krona

In December the Ribsbank took the historic step of lifting the repo rate out of negative territory for the first time in 5 years. However, this looks like it was a one and done move rather than the start of a new hiking cycle.

Indeed, the Swedish central bank said in the December meeting that it still could cut interest rates again, if needed, although analysts consider the bar to cutting or hiking rates anytime soon to be high.

Investors will be watching closely to see if the Riksbank revises inflation and growth forecasts downwards. Inflation is expected to fall in the coming months owing to the decline in electricity and energy prices. With regards to growth, there have been tentative signs that the slump in manufacturing is bottoming out. However, risks from coronavirus could prevent any sustained recovery from taking off. With regards to interest rates, analysts are expecting to hear that rates could move in either direction at any time.

Pound

The pound was unable to hold onto early gains in the previous session after a mixed batch of data and despite calls from Bank of England’s Mark Carney to boost investment and infrastructure spending in the UK.

Speaking at the House of Lords economic committee Mark Carney said that more infrastructure spending and higher corporate spending is needed to boost the UK’s struggling economy. He also said that he believes that UK interest rates will remain low for the foreseeable future; comments that dragged on the value of the pound.

His assessment came following data earlier in the session which showed that UK GDP increased 1.1% on an annual basis, ahead of the 0.8% forecast. However, on a quarterly basis growth stagnated.

Today there is little on the UK economic calendar for investors to sink their teeth into. Instead attention could remain on Boris Johnson, his spending plans and any Brexit trade headlines.

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