GBP/SEK: Swedish Central Bank Rate Decision Moves Into Focus

The pound fell sharply versus the Swedish krona across the previous week. The pound Swedish krona exchange rate tumbled 2%, hitting a 2-week low of 12.4008 amid no trade deal Brexit fears. The pair closed marginally off the low at 12.4535 after snapping a four-day losing streak on Friday. 

GBP/SEK is falling again in early trade on a Monday, at the start of what is expected to be a relatively calm session. At the time of writing the pair is trading -0.1% lower at 12.4363.

GBP/SEK: Pound, out of favour across the board in the previous week

Despite strong PMI data, no trade deal Brexit fears dominated. Prime Minister Boris Johnson laid out his vision for the UK – EU future relationship. His decision to not follow Brussels’ rules unnerved pound investors, particularly since Michel Barnier insisted that a level playing field was needed for a far-reaching trade deal.   

Boris Johnson’s stance has left pound investors fearing that no trade deal will be agreed, and the U.K. will leave the transition period on World Trade Organisation rules, a significant step down from the current arrangement. 

The UK economic calendar is relatively quiet this week, apart from Tuesday, meaning investors will remain focused on the future EU – UK relationship, even though trade negotiations aren’t due to begin until March. Boris Johnson’s reshuffle of his cabinet could also attract some attention.

Swedish Krona

The Swedish Krona advanced across the previous week, thanks in part to some solid data. Household consumption figures rose 0.5% in December month on month, up from the 0.1% increase in November.  Solid consumer spending is an encouraging sign for the Riksbank ahead of its monetary policy announcement later this week on 12^th February.

Sweden’s central bank is broadly expected to keep the benchmark interest rate at 0%. Analysts are not expecting the Riksbank to alter its position for the foreseeable future. This comes after the Swedish central bank surprised many in December by lifting the benchmark rate to 0% from negative interest rates. The Ribsbank had been growing concerned over the impact of negative rates. According to the bank’s most recent forecasts growth of 1.2% is expected for this year and 1.7% for 2021. This level of growth is unlikely to force the central bank’s hand one way or the other for the time being.

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