GBP/SEK: Pound Picks Up From 4 Month Low vs Swedish Krona

The pound was hammered on Monday as Brexit talks began and as the Bank of England pledged to do whatever it takes to support the UK economy from a coronavirus outbreak. The pound tumbled 1% versus the Swedish krona, which was on the front foot after encouraging manufacturing activity data.

GBP/SEK closed the previous session -1.1% at 12.1860. GBP/SEK is rebounding early trade on Tuesday, up 0.2% at 12.1867.

Swedish Krona Rises On Economic Optimism

The Swedish Krona rose versus the weaker pound on Monday following the release of Swedish manufacturing PMI. Data showed that activity in the manufacturing sector rose from 52 to 53.2, boosting optimism in the economy. A level of 50 separates expansion from contraction.

Yet despite the encouraging data, Swedish Krona gains are proving to be short lived as concerns continue to grow over the impact of coronavirus on the global economy and on exporter nation Sweden. Sweden’s Riksbank governor Stefan Ingves recently expressed concern over coronaviris’ expected spread and impact on the Swedish economy.

Swedish Krona investors will now look ahead to Swedish new orders manufacturing figures for January. The data is expected to contract by -0.8%, so the krona could lose some of its gains versus the pound.

Pound Recovering From BoE Inspired Sell Off

Sterling suffered heavy losses in the previous session after the Bank of England joined the Federal Reserve and the Bank of Japan, pledging to take action to shore up the UK economy if necessary. The comments fuelled expectations that interest rate cuts will be imminent. Rate cuts would ease the burden on people and businesses with debts to pay. By making it cheaper to borrow, the central banks are helping companies and people.

The comments came after the OECD warned that it expected global growth to slow, slashing forecasts to just 2.4% as a result of coronavirus. Global growth below 2.5% is considered a recession.

Today there is construction pmi data, which is expected to show that the contraction in the sector is slowing. Investors are also expected to look towards Brexit trade talk headlines and any further coronavirus headlines.

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