The Pound is recovering after dropping lower versus the Swedish Krona on Wednesday. The Pound versus Swedish Krona exchange rate declined 0.6% in the previous session, closing at 11.8734, after striking a fresh 6 month low.
At 06:15 UTC, GBP/SEK is trading +0.2% at 11.9332, after Riksbank restarts its bond buying programme.
Pound Cautiously Higher
The Pound was out of favour across the board in the previous session, experiencing historic declines versus the US Dollar. It is rarely just one factor which creates such enormous moves on the FX markets, however news of a 55% increase in the number of coronavirus deaths unnerved investors. Boris Johnson’s “herd immunity” policy caused a spike in both the number of deaths and the number of coronavirus cases. There were 700 new cases (recorded) bringing the official number to 2,600, although the real number is expected to be many times this.
The Prime Minister Boris Johnson has since adopted a sharp U-turn in his policy approach to coronavirus and UK schools will be closed as from Friday. There is also speculation that London, the largest FX trading hub in the world will go into lock down, potentially as soon as this weekend in a bid to control the outbreak of coronavirus.
Shaky UK fundamentals will keep the pound broadly under pressure. The measures which are about to be implemented will have a large demand shock on the UK economy. A recession is inevitable.
Riksbank & Swedish Government Work To Support Economy
The Swedish Krona traded higher in the previous session, despite the Swedish government pledging, with the Danish government to supply state back credit guarantees so Scandinavian airline SAS can borrow money from banks. The airline, like its peers is suffering from a huge drop in demand following the coronavirus outbreak.
It not just airline’s suffering. The economic impact of the coronavirus pandemic has affected many areas of business, with rising job losses in the worst hit industries. This has prompted several measures by the Riksbank and the Swedish government to whether the crisis. On Monday the Riksbank unveiled a 300 billion Swedish Krona asset purchase programme, which began on Wednesday by buying 2.5 billion in government bonds. This programme is to support the economy and prevent any problems in credit supply.
