GBP/SEK: Swedish Krona Slips For 2nd Straight Day, Industrial Production In Focus

The Swedish Krona slipped versus a stronger pound on Wednesday, snapping a five session winning streak.

The Pound versus Swedish Krona (GBP/SEK) exchange rate declined 0.55% to close at 12.1929 as easing Bank of England rate cut fears overshadowed strong Swedish service sector PMI data.

At 07:00 UTC GBP/SEK was on the risse trading 0.1% higher at 12.2071.

Coronavirus Raises The Prospect Of Downturn In Service Sector

The Swedish Krona trended lower in the previous session despite data showing that Sweden’s service sector expanded at a faster pace in February. The service sector PMI rose to 56.7 from an upwardly revised 53.3 in January. A figure above 50 indicates expansion. Yet despite the strong reading, uncertainty surrounding coronavirus and its effects on growth have increased the risks of a downturn in the sector in the coming months.

Today attention will remain firmly on the Swedish economic calendar with industrial production and new orders data. Last month industrial production figures fell sharply, investors will be watching to see if there was any improvement at the start of the year. Analysts are expecting industrial production to increase 1%v month on month in January after falling -1.2% in December. A solid reading could help support the Swedish Krona.

Pound Gains Ahead of Mark Carney’s Speech

The pound was on the front foot in the previous session after the Bank of England’s incoming Governor Andrew Bailey said that the central bank had limited room to act. On Monday, the Federal Reserve surprised the market with a 50-basis points interest rate cut. The between meetings move was done to shore up the US economy in the face of economic risk from coronavirus. The Bank of Canada followed suit on Wednesday with a 50-basis point cut. Investors have been attempting to gauge which central bank will be next.

The UK has interest rates at 0.75%.  As Andrw Bailey pointed out yesterday, this means that there is limited room for further rate cutting. His comments sent the pound higher.

Today there is no high impacting UK economic data. Investors will be turning their full attention to BoE Governor Mark Carney who is due to speak in London. Investors will be keen to hear any comments regarding the BoE’s plans to shore up the UK economy as the chief medical officer for England says that it is “likely” that the coronavirus outbreak will become an epidemic.

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