The Pound Sterling to Swedish Krona (GBP/SEK) exchange rate gave up earlier gains after the Bank of England left interest rates at 0.5% and economists raised their bets that rates will remain low for longer.
The Pound Sterling to Swedish Krona (GBP/SEK) exchange rate strengthened close to a 1-month low on Thursday after Swedish Prime Minister Stefan Lofven called for snap elections after his minority government lost a budget vote.
First Snap Elections in 60 Years
Despite the calling of the first snap elections in half a century the Krona’s losses have been relatively soft as traders deem the situation to be purely political and not a sign of economic weakness in the Scandinavian nation.
‘There’s no drama and the simple reason is that this is mainly a political crisis and not an economic crisis. Often a political crisis emerges from an economic crisis but that’s not how things are in this case,’ said Richard Falkenhaell, senior currency strategist at SEB AB (SEBA).
The calling of snap elections came about after the current minority government lost the budget vote less than three months after taking power. The vote failed after the right wing Sweden Democrats sided with the opposition.
The Swedish Democrats became the country’s third largest political party after winning 13% of the vote in the general election in September, and is demanding a reversal in Sweden’s liberal immigration laws, which party representative Mattias Karlsson has condemned as an “extreme immigration policy”.
Eurozone Weakness Weighs on Krona
The political uncertainty softend the Krona slightly but it was concerns over the Eurozone, which put most of the pressure on the currency. Another bout of weak data releases out of the region and Thursday’s data showing that unemployment in France rose to a record high did little to ease economist nerves over the currency bloc’s strength.
The European Central Bank policy meeting is expected to offer nothing new in terms of interest rate movements but policy makers could hint that they are edging closer to introducing more stimulus measures in order to tackle the threat posed by deflation and weak economic growth.
BoE in Focus
The Pound meanwhile was finding support ahead of the Bank of England’s (BoE) final policy meeting of the year. Economists are expecting policy makers to leave interest rates unchanged at 0.5% and leave its monthly bond-buying programme at £375 billion.
Pound to Swedish Krona Exchange Rates
The Pound to Swedish Krona Exchange Rate Reached a Session High of 11.832
The Pound to Swedish Krona Exchange Rate Reached a Session Low of 11.768
The Pound to Swedish Krona Exchange Rate is trading in the Region of 11.798
