GBP/SEK Exchange Rate Falls, Brexit Standstill Weighs on Sterling
The Pound Swedish Krona (GBP/SEK) exchange rate fell by -0.7% today, with the pairing currently trading around 12.060kr after August’s UK growth figure fell below forecasts from 0.4% to -0.1%. However, following July’s GDP growth revision from 0.3% to 0.4%, it appears that the UK may have narrowly avoided a Brexit recession.
James Smith, an Economist at the financial services company ING, was upbeat, saying:
‘That said, the economy will most likely avoid a near-term technical recession. Consumer activity is continuing to grow, even if confidence remains fairly depressed. Shoppers appear to have been less fazed by the ups-and-downs of the Brexit process than businesses… [T]he Bank of England is likely to remain cautious, although we still feel its probably too early to be pencilling in UK rate cuts.’
Today, however, saw the UK’s manufacturing sector stumble, with the year-on-year figure sinking from -0.9% to -1.7% in August.
In political news, Brexit continues to dominate headlines with Prime Minister Boris Johnson due to meet his Irish counterpart, Leo Varadkar, to discuss a possible compromise on the Irish border issue.
However, with the EU recently rejected Mr Johnson’s propositions, UK markets are becoming increasingly jittery over the prospect of an October 31 no-deal unless an extension to Article 50 is called upon by the Conservative Government.
SEK/GBP Exchange Rate Rises, Swedish Inflation Beats Forecasts
The Swedish Krona (SEK) rose against the Pound following today’s release of September’s Swedish inflation figure, which rose unexpectedly from -0.4% to 0.5%, and further boosting confidence in the Swedish economy.
However, following comments from Sweden’s National Institute of Economic Research, who said that the economy had ‘clearly entered a cooling down phase’, Swedish markets are remaining cautious. And due to today’s inflation figure falling below the Riksbank’s target of 2%, we could see some rate cuts in the near-term.
Torbjorn Isaksson, an Economist at Nordea, commented:
‘The bank can ignore temporary swings in inflation as long as expectations are anchored at the target, and the downward trend is thus a concern for the Riksbank, supporting our view of a rate cut around the turn of the year.’
GBP/SEK Outlook: Could Sterling Sink Further on Heightened No-Deal Brexit Fears?
The trade-reliant Swedish Krona will likely be driven by ongoing global trade developments this week, with US-China trade negotiations remaining in focus. Any indications of relations souring between the world’s two largest economies could weigh on market sentiment in the Swedish currency.
With no UK ecostats due out tomorrow, Brexit developments will continue to drive the GBP/SEK exchange rate. However, with UK-EU negotiations having effectively broken down, we could see Sterling begin to ease on rising fears of a no-deal.
Comments are closed.