GBP/SEK: Swedish Fundamentals & Brexit Trade Talks In Focus

Concerns surrounding the post Brexit trade talks dragged the pound lower on Wednesday.

The GBP/SEK exchange rate declined 0.65% pairing gains from earlier in the week. Week to date, the pair is on down 0.35%.

Will Swedish Data Drag On the Krona?

Swedish macro-economic data will be in focus today. With a slew of economic releases dye, investors will have a good snapshot of the health of the Swedish economy. The data due to be released includes business and consumer confidence, consumer inflation expectations, household lending growth, balance of trade, retail sales and PPI which is a measure of inflation at wholesale level.

Analysts are expecting weaker readings across the board compared to the prior month’s release. Of the above data points the most closely watched will be the consumer inflation and retail sales. Consumer inflation is expected to decline to 3.3% from 3.4%, whilst retail sales are forecast to drop -0.7% month on month in January after gaining 0.5% in December. Should the data paint a weaker picture of the Swedish economy, the krona could come under pressure.

UK Trade Talks Mandate To Be Released

Today Boris Johnson’s goals for the post Brexit negotiations will be released. The are expected to show that the UK is looking to take back full control over its rules, in areas such as state aid, employment law and the environment. However, this would be in contrast to the EU’s requirements of a level playing field. Downing Street have already said that signing up to follow EU standards would defeat the point of Brexit.

Other potential points of contention include fishing waters and the return of “unlawfully removed cultural objects”. Ministers are expected to set out demand for a Canada style agreement with zero tariffs.

Recent exchanges between the two sides and a toughening of stances gives an indication as to the challenges that the EU and the UK face. Investors are growing increasingly doubtful as to whether a trade deal will be reached. This could mean leaving the EU on World Trade Organisation terms, a step down from the current arrangement. These concerns are expected to keep the pound under pressure.

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