After dropping 0.9% versus the Swedish Krona on Tuesday, the Pound versus Swedish Krona exchange rate was extending those losses in early trade on Wednesday following a BoE rate cut.
At 07:10 UTC. GBP/SEK is trading -0.4% at 12.2302
Whilst coronavirus remains a central theme, Pound investors are also looking ahead to a slew of data and the Budget. Meanwhile the Krona remains supported by the latest comments from Riksbank Governor Stefan Ingves, who along with his Deputy Governor don’t consider a rate cut a as likely option just yet.
Budget For Coronavirus
It’s Budget day in the UK. Today’s budget comes at a unique time when the UK is not only preparing for life outside of the EU, but also as coronavirus threatens t drag on the economy and potentially pull the UK into a recession.
UK Chancellor Rishi Sunak’s Budget is expected to be dominated by money for the National Health Service and to businesses to help them survive over what is expected to be a very difficult few months.
Escalating coronavirus cases are expected to result in a significant number of workers off sick. A supply shock and demand shock are expected for businesses. The Chancellor is expected to be generous in his fight to limit to the economic impact that coronavirus has. Investors will be looking for strong spending plans that will prevent a very hard but temporary hit on the economy becoming something far more deeply entrenched and longer term.
Should the markets consider than Chancellor Rishi Sunak has not gone far enough with spending to support the economy, the pound could fall.
The Pound is also falling after the BoE jumped in and cut interest rates by 50 basis points.
No Cut Yet For Sweden
Coronavirus continues to be the central focus in Sweden. As an open economy Sweden is of course vulnerable to the negative impacts of coronavirus on its economy and the economies of its trading partners.
Central banks across the globe are cutting interest rates in order to support the coronavirus shock to the economy. Investors are attempting to gauge which central will be next. According to the latest comments from Stefan Ingves and Deputy Governor Anna Breman, it won’t be the Riksbank. The duo said that it is too early to determine the impact of coronavirus.
Having just increased the interest rate back in December, out of negative territory, the pair are clearly wary about lowing it again so soon. One of the big concerns is the impact that coronavirus will have on small business and cashflow. A rate cut won’t help much with that regard. The comments offered support to the Swedish Krona.
