The Swedish Krona is edging lower versus the Pound at the start of the new week, after advancing 0.3% across the previous week. The Swedish Krona settled on Friday at 12.4406 after trading a range of 12.3728 – 12.5149 across last week.
At 06:45 GBP/SEK was trading at +0.1% at 12.4423 As investors cheer the return of Prime Minister Boris Johnson and look ahead to the Riksbank monetary policy announcement on Tuesday, along with the release of Swedish retail sales.
Pound Cheers Boris Johnson’s Return
The Pound is advancing as Boris Johnson returns to Downing Street amid growing pressure ti reveal an exit strategy to get the UK out of lock down. So far, the government has said very little about how it intends to get the UK back to work. There are reports that Boris Johnson could modify the lock down as soon as this week but insisting that restrictions will remain in place even if workplaces and schools reopen.
Whilst coronavirus fatalities and new infections are declining at a frustratingly slow pace, the hit on the economy has been hard a fast. Data last week highlighted the severe impact that the covid-19 lock down is having on the UK economy. The composite PMI plunged to a record low of 12.3, down from 34.5. Retail sales also declined at the fastest pace on record in March at -5.1%
The UK economic calendar is quieter this week leaving investors to focus on UK earnings, UK government policy and coronavirus statistics.
No Rate Cut From Riksbank Expected
Swedish Krona investors ae already turning their attention to the release of the Rikssbank interest rate announcement which is due tomorrow. The Riksabank are not expected to start cutting interest rates. Central bank officials are wary of taking the repurchase rate back into negative territory after only having raised it in December after 5 years.
It is worth keeping in mind that the bank’s decision in December was motivated by a desire to prevent negative rates becoming a more permanent state of affairs rather than owing to any particular strength in the Swedish economy. Therefore, economists expect the focus tomorrow to be on tool and measures to ensure that credit continues to flow supporting small businesses in a period when cash flow is a problem.
