The Swedish Krona is trading flat in early trade on Wednesday after snapping a four-session winning run in the previous session, closing -0.4% lower against the pound.
The GBP/SEK exchange rate traded within a familiar range of 12.5712 – 12.6780, before settling at 12.6263.
Looking ahead Brexit and coronavirus could create some volatility in the pair, whilst Thursday and Friday see a slew of Swedish data due to be released.
Brexit To Limit Upside
The pound was in recovery mode on “turn-around Tuesday”. Sterling trended higher, recouping Monday’s losses after encouraging data. Data from the Confederation of British Industry (CBI) showed that retail sales crept up in February in its best performance since April. The CBI monthly gauge hit 1 in February, up from 0 in January. This was below analysts’ expectations of 4. However, investors were willing to turn a blind eye, instead cheering that the survey also pointed to an uptick in investment later this year.
Business investment has been particularly weak amid lingering Brexit uncertainty. However, the data was in line with comments from Bank of England chief economist Andy Haldane, who said that he saw signs of “stirring in the undergrowth” regarding firms’ capital spending plans.
Despite the encouraging signs in the economy, any pound gains could well be capped as investors focus on post Brexit trade talks which are due to start next week. EU Ministers approved their mandate for the trade talks. UK ministers have also agreed the UK mandate which will be published on Thursday.
Coronavirus Spread Weighs On Swedish Krona
The Swedish Krona was on the back foot in the previous session as coronavirus fears remained. With the focus now shifting off China and towards Italy and Europe analysts have started questioning the Swedish Krona’s ability to remain firm. Seen as a barometer of risk confidence the Swedish Krona could be one of the hardest hit currencies should the spread of coronavirus pick up across Europe.
Sweden’s fundamentals will be in focus on the last two days of this week. Whilst there is no economic data due today, tomorrow sees the release of business and consumer confidence, retail sales, balance of trade and consumer inflation. Analysts are expecting to see a slightly softer data compared to last month. For example, inflation is due to tick lower to 3.3% in February, down from 3.4% and retail sales are expected to decline -0.7% month on month compared to a 0.5% increase in January. Weaker data could drag on demand for the Swedish Krona.