The pound is paring losses after a steep sell off in the previous session.
The pound dived 0.9% versus the Swedish Krona on Thursday as Boris Johnson brought back the no trade deal Brexit threat. GBP/SEK exchange rate is trading 0.6% higher at 12.5111 at 06:00 UTC on Friday.
Slew Of Swedish Data
The Swedish Krona pushed northwards for a second straight session on Thursday on the back of upbeat economic data. There was a raft of data released from Sweden in the previous session which painted the Swedish economy in a better light than what analysts had been anticipating.
Sweden’s consumer confidence index increased to 98.5 in February, an impressive jump up from an upwardly revised 92.7 in January. This was ahead of analysts’ forecasts of 98.2.
A separate report showed that Sweden recorded a SEK 9.9 billion trade surplus in January, significantly wider than the SEK 1 billion surplus a year earlier. This is the highest that the trade surplus has been in almost a decade.
Adding to the good news, retail sales rose 0.9% month on month in January, reversing a -0.9% decline in December, whilst besting expectations of a fall.
The only area of weakness highlighted in the barrage of results was a fall in producer prices. Producer prices measure inflation at wholesale level and economists often consider them a good lead indicator for consumer inflation. Producer prices fell to 113.2 in January, down from 114.3 in December. This points to a potential softening in inflation down the line.
This weeks raft of data doesn’t end there. Today investors will be looking to Sweden GDP figures for further clues over the health of the economy. Analysts expect the economy to see a slow in growth to 0.2% quarter on quarter, down from 0.3%. Annually the rate is expected to slip to 0.8%, down from 1.6%.
Brexit Drags On Pound
The pound plummeted in the previous session and any gains going forward are likely to be limited after Boris Johnson renewed his threat of a no trade deal Brexit. Boris Johnson threatening to walk away from trade talks in June if insufficient progress has been made, brought the reality of a hard exit on WTO rules closer. This would be a considerable step down from the current arrangement, with the government forecasting an 8% hit to the economy over 15 years. The pound fell steeply on the news, although is showing signs of paring those losses in early trade on Friday.