The Pound is extending gains versus the Swedish Krona for a second straight session on Friday, at the ed of a volatile week. The Pound Swedish Krona exchange rate closed on Thursday +0.5% at 11.9349 after the BoE unveiled additional monetary stimulus. Investors now await further fiscal stimulus measures from the UK Government, to support the UK economy ahead of the incoming coronavirus hit.
At 06:00 UTC, GBP/SEK is trading +0.7% at 12.0252, after having slipped from an overnight high of 12.0823.
Pound Cheers Rate Cut
The Pound rallied in the previous session after action from the Bank of England. The BoE cut interest rates in an emergency unscheduled meeting on Thursday, for the second time in just over a week. The new BoE Governor Andrew Bailey and policymakers voted to cut interest rates from 0.25% to 0.1%. This is the lowest that the British interest rates have been at in history. Additionally, the BoE agreed to add £200 billion to its holding of UK Gilts.
This move follows a rate cut of 0.5% made last week, in addition to other measures to help both businesses and individuals cope with the impact of coronavirus.
Today Chancellor Rishi Sunak is expected to add to the fiscal support that the government is putting forward to prop up the country. He is due to announce a huge rescue package for UK companies and their workers. This comes following his announcement of a £330 million bailout earlier in the week.
Swedish Riksbank Prepared To Do More
The theme this week has undoubtedly been central bank action. Earlier in the week the Riksbank unveiled measures such as offering more loans to banks at favourable terms and by increasing asset purchases. The moves are to cushion the Swedish economy from the effects of coronavirus.
The measures put into place by the Swedish central bank mean that banks can borrow money from the Riksbank at a lower interest rate. This allows additional liquidity into the system and should prevent any blockages.
Central banks across the globe are showing that they are prepared to do whatever it takes to support their economy. The Riksbank has said it is prepared to take further measures to supply additional liquidity between meetings.
Investors will continue to monitor coronavirus developments and policy makers’ response.
